U.S. President Donald Trump said that Iran will be bombed “at a much higher level” if it doesn’t agree to a peace deal.
The president said the war “will be at an end” if Iran agrees to the proposals, meaning the Strait of Hormuz “will be open to all.”
His post on Truth Social came after markets reacted to an Axios report that the U.S. and Iran were close to an agreement that would bring their two-month war to an end.
The outlet reported on Wednesday that Washington expects responses from Tehran on several key points to form the basis of a one-page memo within the next 48 hours.
Oil prices fell sharply in response, while U.S. stock futures, equities listed in Europe and global sovereign bonds rallied.
In his Truth Social post, the president warned that if Iran did not agree to a deal, “the bombing starts, and it will be, sadly, at a much higher level and intensity than it was before.”
Before the post, a Pakistan government official told MS Now: “The prospect of a proposal to end the war is very likely in the coming days.”
A spokesperson for Iran’s foreign ministry told CNBC earlier on Wednesday they were “evaluating” a 14-article peace proposal from the U.S.
Axios reported that the deal would involve Iran committing to a moratorium on nuclear enrichment, the U.S. lifting sanctions on Iran, and both parties retreating from controls on ship transits through the Strait of Hormuz.
Many of the terms are reported to be contingent on a final agreement being reached between the two countries’ delegations.
A ceasefire between the U.S. and Iran has been in place since April 7 to allow for negotiations, but the break in hostilities has often looked fragile.
Earlier this week, Iran attacked U.S. forces that were helping commercial vessels transit the Strait of Hormuz, and launched fresh attacks on the UAE. The U.S., meanwhile, said it sank six small Iranian boats that attempted to interfere with commercial ships moving through the waterway.
But optimism for an end to the conflict resurfaced on Tuesday when Trump said he was pausing “Project Freedom” — the U.S. military’s operation aimed at guiding ships out of the Strait of Hormuz — a day after it began to see whether a peace deal could be finalized.
“Great Progress has been made toward a Complete and Final Agreement” with Iran, Trump wrote in a Truth Social post.
— CNBC’s Kevin Breuninger contributed to this report.