Oil prices plunged below $100 a barrel on Wednesday morning, easing fears of a prolonged global energy crisis after President Donald Trump cited 'great progress' toward a deal with Iran.

Brent crude dropped 10 percent to $98 a barrel, the first time below $100 since April 22, while West Texas Intermediate futures fell 12 percent to $89. The sharp decline followed Trump's announcement that he would briefly pause 'Project Freedom,' a U.S. operation to escort stranded commercial ships through the Strait of Hormuz, to allow time to finalize an agreement.

Trump stated the war could end soon if Iran accepts terms, including reopening the strait to all traffic, but warned that failure to agree would lead to bombing 'at a much higher level and intensity.' He described the progress as heading toward a 'complete and final agreement,' though he later told reporters a peace signing was 'too soon.'

Reports indicated the U.S. and Iran were nearing a one-page memorandum of understanding to pause hostilities. The framework calls for Iran to impose a 12-to-15-year moratorium on nuclear enrichment, remove highly enriched uranium, accept enhanced U.N. inspections, and refrain from weaponization activities. In return, the U.S. would gradually lift sanctions, release frozen Iranian assets, and both sides would ease restrictions on Hormuz transit over 30 days.

The conflict began in late February when Iran blockaded the Strait of Hormuz, a chokepoint for 20 percent of global oil supplies, stranding thousands of vessels and triggering a surge in prices to $126 a barrel last week. The U.S. responded with a blockade of Iranian ports and military escorts, but only a handful of ships have transited safely. U.S. gasoline prices have risen over 50 percent since then, averaging $4.54 per gallon nationwide.

Markets rallied on the news. U.S. stock futures climbed, with S&P 500 contracts up 1 percent and Nasdaq futures surging 1.6 percent. European indexes rose more than 2 percent, and bond yields fell as investors anticipated lower inflation pressures.

Iran's Revolutionary Guards Navy signaled readiness to ensure safe passage through the strait under 'new procedures' once U.S. threats end. Foreign Minister Abbas Araghchi emphasized Tehran would accept only a 'fair and comprehensive agreement.'

Analysts welcomed the de-escalation but urged caution, noting repeated false starts in talks and ongoing bottlenecks even if a deal materializes. Goldman Sachs projected prices could stabilize in the $80-to-$90 range amid reduced Hormuz flows.