Oil prices dropped while U.S. equity futures pointed toward fresh record highs Wednesday after President Trump backed away from plans to escort commercial vessels through the Strait of Hormuz. The reversal eased immediate concerns of a military escalation between Washington and Tehran.

The Trump administration moved to cool tensions with Iran, playing down Tehran's attacks in recent days. Trump said there had been "great progress" toward a complete and final agreement with Iran, signaling a potential diplomatic resolution to months of heightened geopolitical tension in the Middle East.

Markets responded positively to the de-escalation, with risk assets climbing as the probability of imminent conflict diminished. Energy markets stabilized as supply disruption fears abated, while the S&P 500 looked to extend its record-setting rally.

The shift away from military posturing removes a key source of uncertainty that had weighed on investor sentiment. The Strait of Hormuz handles roughly one-fifth of global crude shipments, and investors had been bracing for a conflict that could disrupt oil flows through the strategic waterway.