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Oil prices dropped nearly 6% as US President Trump announced progress in Iran talks.
Asian markets rallied, with major indices showing significant gains.
Many energy-importing developing economies already under major strain.
Oil prices fell sharply and Asian equities gained on March 25, 2026, after reports that United States President Donald Trump had sent a peace proposal to Iran fuelled optimism that tensions in the Iran-Israel conflict could ease.
Trump said Washington and Tehran were “currently in negotiations” and suggested Iran was eager to strike a deal, although Iranian officials have denied holding direct talks with the US.
According to a New York Times report, market sentiment improved after Washington had sent a 15-point plan to end the conflict to Iran via Pakistan. It was unclear how widely the proposal had been circulated among Iranian officials or whether Tehran would accept it as a basis for negotiations, the report said.
Brent crude, the global benchmark, fell 5.92 per cent to $98.30 per barrel, while the benchmark US contract West Texas Intermediate declined 5.01 per cent to $87.72 in early trading.
Despite the drop, prices remain well above pre-war levels of around $66 per barrel in late February, near levels last seen during the 2022 global energy crisis triggered by the Russia-Ukraine war. Brent had surged above $110 earlier in the week as fears mounted over possible disruptions to shipments through the Strait of Hormuz — a 33-km narrow corridor that normally carries about 20 per cent of global oil and LNG supplies, before retreating on reports of diplomatic outreach.
Asian equity markets rose on the back of the diplomatic signals. Japan’s Nikkei 225 climbed 2.8 per cent, while South Korea’s Kospi gained 3.1 per cent in early trading. Hong Kong’s Hang Seng index rose 1.2 per cent, and China’s Shanghai Composite added 0.9 per cent.
Australia’s S&P / ASX 200 advanced 2.2 per cent, while Taiwan’s Taiex was up about 3 per cent.
European natural gas prices, which had more than doubled since the war began, recently touched about €68 per megawatt hour before easing slightly on March 25 as ceasefire hopes grew.
Supply concerns remain significant after Iranian attacks on Qatar’s Ras Laffan facility damaged roughly 17 per cent of its liquefied natural gas (LNG) capacity, with repairs expected to take three to five years, according to industry estimates.
While financial markets reacted positively to the diplomatic developments, the conflict has already placed severe pressure on many energy-importing developing economies.
Countries across Asia, Africa and the Middle East have been hit by soaring fuel costs and supply disruptions.
In Pakistan, which imports about 80 per cent of its energy from the Gulf, authorities have introduced emergency conservation measures, including closing schools, adopting a four-day work week for government offices and expanding remote work to preserve fuel supplies.
Prime Minister Shehbaz Sharif said the government would absorb rising costs instead of raising petrol and diesel prices before the Eid al-Fitr holiday, even after approving an earlier increase of 55 Pakistani rupees per litre.
Bangladesh, which imports roughly 95 per cent of its oil, has introduced fuel rationing in some districts as supplies tighten.
Sri Lanka, still recovering from an economic crisis, has declared Wednesdays a public holiday and introduced a mandatory fuel pass system for vehicles to manage dwindling petrol and diesel stocks.
In Egypt, one of the region’s largest energy importers, authorities have ordered malls, shops and cafes to close earlier and raised fuel prices by 15–22 per cent to ease pressure on public finances.
Economists warned that prolonged disruption could trigger broader macroeconomic instability.
A recent analysis by the Centre for Global Development identified Pakistan, Bangladesh, Sri Lanka, Jordan, Senegal, Egypt, Angola, Ethiopia and Zambia among the countries most vulnerable to the shock.
In India, retail petrol and diesel prices have remained largely unchanged despite global volatility, as state-run oil marketing companies absorb earlier cost increases.
Petrol currently costs about Rs 94.77 per litre in New Delhi, Rs 103.54 in Mumbai, Rs 105.41 in Kolkata, Rs 101.06 in Chennai and Rs 107.50 in Hyderabad, while diesel prices stand at Rs 87.67, Rs 90.03, Rs 92.02, Rs 92.61 and Rs 95.70 per litre, respectively.
Cooking gas prices, however, rose earlier in the month amid supply disruptions. Domestic LPG (14.2 kg) now costs about Rs 913 in Delhi, reflecting a Rs 60 increase implemented on March 7, while commercial LPG cylinders are priced at around Rs 1,884.50.
Compressed natural gas (CNG) rates remain largely unchanged at about Rs 77 per kg in Delhi and Mumbai.
The Indian government has introduced a series of emergency measures to cushion the economy from energy shocks. Authorities have invoked the Essential Commodities Act, 1955 to prioritise fuel supply for households, hospitals and transport, while restricting LPG refill bookings to prevent hoarding.
India has also issued the Natural Gas (Supply Regulation) Order, 2026, establishing a four-tier priority system that gives preference to domestic piped natural gas and transport CNG over industrial use.
Separately, the Cabinet Secretariat has constituted seven Empowered Groups of Secretaries to monitor the impact of the West Asia conflict on sectors including energy supply, trade, logistics and essential commodities, according to The Indian Express.
The groups will assess risks to fuel supplies, identify alternative import sources and take measures to mitigate disruptions if the conflict escalates.
Meanwhile, the World Trade Organization has warned that disruptions to fertiliser shipments through the Strait of Hormuz could push up food prices and worsen shortages worldwide.