Investors are also watching the US Federal Reserve closely.
The Fed kept interest rates unchanged at its latest meeting, citing concerns that higher energy prices could fuel inflation.
Notably, four policymakers dissented from the decision, the highest number since 1992.
Three opposed signalling future rate cuts, while Stephen Miran pushed for an immediate quarter-point cut.
Jerome Powell's term as Fed Chair is ending soon, with Kevin Warsh set to take over next month.
What happens next?
Much now depends on whether Washington and Tehran can break their negotiating deadlock.
If talks improve, oil prices could fall back quickly.
But if the blockade continues or military action resumes, markets may face even more volatility.
For now, traders are preparing for a longer period of uncertainty.
That means higher oil prices, nervous stock markets and close attention to every statement coming from Washington and Tehran.
(With AFP inputs)
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