World Awaits Iran’s Response to US Peace Proposal as Oil Prices Fall and Global Tensions Show Signs of Cooling
Global leaders and financial markets are closely watching Tehran as Iran prepares to respond to Washington’s latest proposal aimed at ending the ongoing Middle East conflict and reopening one of the world’s most important shipping routes through the Gulf.
Across Asia, stock markets surged while oil prices continued to slide after US President Donald Trump signaled that progress had been made during recent negotiations. Iran also confirmed that it would deliver its latest position to mediator Pakistan, raising hopes that diplomacy may finally ease months of escalating conflict.
The potential agreement could have wider effects across the region, particularly in Lebanon, where tensions with Israel remain fragile after renewed violence in southern Beirut reportedly killed a senior Hezbollah commander.
The war, which began in late February following military operations led by the United States and Israel, has triggered retaliatory attacks by Iran across the Middle East. One of the biggest global concerns has been Iran’s pressure on the Strait of Hormuz, a vital trade passage responsible for transporting a major share of the world’s oil, liquefied natural gas, and commercial shipping.
Earlier this week, Trump briefly authorized a naval escort mission to secure commercial shipping through the strait. However, the operation was quickly paused after reports of progress in negotiations mediated by Pakistan and backed by Gulf Arab nations.
Speaking to reporters on Wednesday, Trump said discussions over the past 24 hours had been “very good” and suggested a breakthrough could be possible soon. At the same time, he warned that military action could return if Iran rejects US demands.
Iranian Foreign Ministry spokesman Esmaeil Baqaei stated that the American proposal remains “under review” and that Tehran would communicate its final response after internal consultations are completed.
According to reports from NBC News, Saudi Arabia’s Crown Prince Mohammed bin Salman reportedly spoke directly with Trump and declined to allow US military forces to use Saudi airspace or bases for operations linked to the Strait of Hormuz. This development is believed to have influenced Washington’s decision to step back from immediate military escalation.
Meanwhile, Axios reported that officials from both Washington and Tehran are nearing agreement on a short memorandum of understanding that could formally halt the conflict and create a pathway for future negotiations regarding Iran’s nuclear program.
Financial markets reacted positively to the possibility of peace talks succeeding. Oil prices dropped another two percent on Thursday after already falling sharply earlier in the week. Asian markets also rallied strongly, with Japan’s Nikkei index leading gains across the region as investors regained confidence.
Although energy prices remain elevated compared to levels before the conflict, both Brent crude and West Texas Intermediate crude have now dropped below the symbolic US$100 mark.
The Strait of Hormuz remains central to global concerns because it carries nearly one-fifth of the world’s oil and LNG trade. Fears intensified earlier this week when the South Korean cargo ship HMM Namu caught fire while attempting to pass through the channel during heightened tensions.
Trump later accused Iran of targeting the vessel, urging South Korea to support US-led efforts to secure maritime trade routes. Iran’s embassy in Seoul strongly denied the allegations.
Inside Tehran, reactions among ordinary citizens remain mixed. Some residents expressed exhaustion over the prolonged conflict and uncertainty about the country’s future.
One resident, identified as 43-year-old translator Azadeh, described the possibility of another political agreement as emotionally difficult after months of suffering and instability. She said many ordinary people feel trapped between war, economic hardship, and political uncertainty.
At the same time, violence continues elsewhere in the region. Israeli airstrikes targeted Beirut’s southern suburbs on Wednesday, marking the first such attack in nearly a month. Lebanese health officials reported multiple casualties across southern and eastern Lebanon, while the Israeli military said four of its soldiers were wounded by a drone explosion near the border.
While global markets are reacting with optimism, many observers believe the coming days will be critical. The world is now waiting to see whether diplomacy can finally slow the momentum toward a wider regional war or whether another breakdown in talks could push the Middle East back into deeper instability.