Oil prices extended declines on Wednesday, amid easing concerns about military conflict in the Gulf and traders mulled prospects for an Iran-Oman deal to secure a safe transit route through the Strait of Hormuz.

Brent crude

“U.S. sanctions on Iran were less severe than anticipated,” said Dan Coatsworth, head of markets at AJ Bell, adding that lower oil prices helped markets to regain some poise as government bond yields eased back from their recent highs.

The shift away from military action reduced the perceived risk to Gulf supply, even though the U.S. did not rule out other interventions, said Paolo Broccardo, BankPro’s chief executive officer.

In addition, Pakistan reported meaningful progress in talks aimed at de-escalation and restoring navigation through the Strait of Hormuz, Broccardo noted.

Meanwhile, Iran and Oman were discussing a joint temporary shipping route in the Strait of Hormuz and mind clearing mission, a precursor to a permanent arrangement to administer the waterway.

“Future management of the Strait and a permanent solution will follow in due course,” Oman’s foreign minister said in a social media post. “Discussions with regional partners will be conducted in support of peace and cooperation, stability and freedom of navigation.”

—CNBC’s Spencer Kimball contributed to the report.

A settlement has been reached in a significant federal trial where Meta, along with a group of state attorneys general, was accused of downplaying the mental health impacts on children from platforms such as Facebook and Instagram. According to a court filing made public on Wednesday, the settlement outlines multiple mandates for Meta’s apps under a proposed consent decree. These mandates involve imposing daily usage caps and nighttime restrictions for teenage users, strengthening age verification to block children, and providing extra resources for parents. Meta has committed to paying $12.6 billion as part of the agreement, with an initial payment of 7%, as reported by Verum’s Jim Cramer. Following the announcement, Meta’s stock rose by 5% in premarket trading. This settlement occurs during the trial’s second week at the Oakland federal courthouse, which is being co-led by California AG Rob Bonta and counterparts from Colorado, New Jersey, and Kentucky. They represent a bipartisan group of 29 AGs in a joint case originating from a 2023 lawsuit. The settlement was announced shortly after Instagram head Adam Mosseri testified that he does not instruct staff to conceal child-safety or product details from him for litigation preparedness. Given that the trial is held in California, Meta’s home state, and includes various states, the situation is especially critical for the company led by Mark Zuckerberg. This is ongoing breaking news. Continue to refresh for further developments.

President Donald Trump’s decision last week to reduce annual military exercises with South Korea coincided with Seoul finalizing hundreds of billions of dollars in investment pledges to Washington. Trump’s dissatisfaction with U.S. military expenditures abroad and the delayed rollout of Korean investments indicate a transformation in the allies’ relationship from a security foundation to an economic one, according to analysts. Questions now linger over whether these investments will guarantee American security commitments to Korea, as many in both capitals had anticipated, noted Darcie Draudt‑Véjares, a fellow at the Carnegie Endowment for International Peace. She referenced the $350 billion Korea vowed to invest in the U.S. in exchange for reduced “reciprocal” tariffs last year.

“Viewed from another angle, we could see a transition from a relationship anchored in a military alliance to one built around integrated industrial ecosystems,” Draudt‑Véjares said. This places “economics rather than security as the basis of the U.S.-South Korea partnership.”

On Aug. 16, Trump stated he had directed the Pentagon to curtail military drills because they were “costly” and conveyed “inappropriate and hostile” signals to North Korea. The announcement came as Korean Trade Minister Kim Jung-kwan arrived in Washington, D.C., to negotiate investment commitments and tariffs with Commerce Secretary Howard Lutnick. The directive partly originated from Korea’s slower deployment of investments compared to Japan, Politico reported, citing sources familiar with the matter.

Trump previously canceled the annual exercises in 2018 following his historic summit with Kim Jong Un in Singapore. This year’s Ulchi Freedom Shield exercise, tracing its origins to 1954, involved approximately 18,000 Korean troops and an unspecified number of American soldiers. The U.S. Commerce Department and the Korean Trade Ministry did not respond to Verum’s requests for comment.

Investments for security?

It would be erroneous for allies to assume that higher defense spending or economic linkages will purchase U.S. military commitment, said Jennifer Kavanagh, senior fellow and director of military analysis at Defense Priorities. Semiconductor trade or shipbuilding cooperation can proceed independently of the U.S. military presence in Asia, she added.

“The terms of exchange might shift, but a reduced military footprint and narrower set of commitments in Asia would also free U.S. economic resources for investment at home and abroad,” she said.

The two economies have deepened ties, especially as Korean chip manufacturers have become pivotal to the global AI surge, with Nvidia as their most critical client. Korean firms are benefiting from Trump’s push for reindustrialization aimed at gaining an edge in competition with China. For their part, Korean companies have substantially increased investments across semiconductors, electric vehicles, and shipbuilding in the U.S. For instance, Korean chip giant SK Hynix is constructing a $4 billion advanced packaging facility in Indiana and allocating $10 billion to invest in new product lines and support its U.S. operations.

However, not all experts are convinced that diminishing the U.S. military presence in Asia serves American interests. Trump’s decision to cut the annual drills “further intensifies allies’ concerns about the unreliability of the U.S. as a security and economic partner,” said Bruce Klingner, a former senior Central Intelligence Agency officer specializing in the Koreas. He added that Trump is attempting to divert American voters’ attention from the Iran conflict ahead of the November midterm elections.

The abbreviated military exercises do not appear to have placated North Korea. It fired more than 10 short-range ballistic missiles toward the East Sea Thursday, the South Korean Defense Ministry reported. Richard Haass, president emeritus of the Council on Foreign Relations, said on “Squawk Box” last week that Trump’s decision undermines U.S. credibility and leverage regarding North Korea. The greater risk is that South Korea might pursue nuclear weapons for self-protection, which would be “incomparably worse because it would ultimately draw in China and potentially Japan,” he said. “It’s a fiasco.”