HONG KONG : Oil prices extended losses Wednesday and most equity markets rose, fuelled by the US-Iran deal, with attention now on peace talks and the reopening of the crucial Strait of Hormuz.

Crude has tumbled more than 10 percent this week on optimism for a lasting agreement between the two countries after more than three months of conflict that rattled energy markets and revived inflation.

The latest drop was boosted by a report in The Wall Street Journal that Washington could ease sanctions on Iranian crude as part of the deal to end the war, allowing Tehran to immediately sell crude and refined oil products.

Attention now turns to Friday's official signing ceremony in Switzerland and the subsequent negotiations that will focus on the fate of Tehran's nuclear programme and a plan for the lifting of international economic sanctions.

US President Donald Trump has said the Strait of Hormuz -- through which a fifth of global crude usually passes -- would "completely open" once the peace agreement is signed.

Both main contracts started Wednesday slightly higher after shedding more than five percent on Tuesday before turning negative, though analysts warned that with so many hurdles ahead prices were likely to be sensitive to developments.

"The risks are skewed to the upside," said Fabien Yip, market analyst at IG.

"Any failure at the 19 June signing to produce a durable and transparent agreement -- particularly on nuclear provisions -- could rapidly reverse the recent decline, as each prior false start has demonstrated.

"A sustained recovery in strait traffic remains the most credible evidence that the deal is holding."

Meanwhile, oil industry experts and shipping companies have cautioned that the restoration of normal operations after the strait's near shutdown will take time.

And on Wednesday the OECD said inventories held by member countries fell in May to their lowest level since 1990 as governments drew down stocks to offset the blockage of Gulf crude shipments during the war.

Equity markets mostly advanced ahead of the Federal Reserve's first policy announcement under new, Trump-appointed boss Kevin Warsh.

Tokyo and Seoul enjoyed their best finishes -- both markets building on their breakneck tech rallies.

Shanghai, Sydney, Singapore, Mumbai and Taipei also rose, though Hong Kong, Wellington, Manila, Bangkok and Jakarta all fell.

Paris rose but London and Frankfurt edged down.

The broad gains came after a mixed day on Wall Street, where the Dow hit a fresh record high but the S&P 500 and Nasdaq retreated.

While expectations are for the Fed to stand pat on interest rates, investors will be keeping a close eye on its post-meeting statement for an idea about the policy committee's thinking in light of surging inflation and a strong jobs market.

Data last week showed US consumer prices rose in May at their highest level for three years owing to the impact of surging oil costs caused by the war.

Some observers predict the Fed will eventually announce an increase before the end of the year, despite Trump's previous demands for cuts.

"Warsh... inherits the most divided committee in more than three decades, with three voting members already dissenting against the easing bias in April, while outgoing governor Stephen Miran again voted in favour of a rate cut," said Michael Krautzberger, chief investment officer for public markets at AllianzGI.

"The minutes suggested that the committee's centre of gravity has shifted in a more hawkish direction as uncertainty about the duration and economic implications of the Middle East conflict continues to mount."

He added that "resilient economic activity and indications that labour-market conditions are stabilising support a less accommodative policy outlook".

"In a rapidly evolving economic and geopolitical environment, we expect the (bank) to remain on hold this year," he said.

"But resilient growth, a stabilising labour market and increasing inflation pressures have shifted the balance of risks in a hawkish direction."