Oil prices fell sharply and Asian stock markets surged to record highs as hopes grew that the US and Iran were nearing a deal to reopen the Strait of Hormuz , though optimism was tempered by continuing military tensions in the waterway.

Brent crude fell 7.8 per cent to $101.27 a barrel on Wednesday – down from more than $115 earlier in the week – after US president Donald Trump said the strait could be "open to all" if Iran accepted a reported agreement, the details of which he did not disclose.

Axios reported the US believed it was close to a one-page memorandum of understanding to end the war, citing four sources, which would declare an end to hostilities and begin a 30-day period of negotiations on reopening the strait, limiting Iran's nuclear programme and lifting US sanctions.…