Oil prices have fallen to a three-month low and stocks are rallying after Donald Trump claimed he was close to reaching a deal with Iran, sparking fresh hopes among investors.

Financial markets were rebounding at the end of a week which began with renewed tensions in the Middle East.

But the US president said on Thursday that he had called off further military strikes against Iran which were scheduled for the evening and claimed the Strait of Hormuz would open as soon as an agreement is signed.

The prospect of the critical transit route reopening helped fuel a drop in the price of Brent crude oil, which was down about 2% to 88 US dollars a barrel – the lowest price since early March.

Oil and gas prices soared in the…