Markets feel relief as the U.S. and Iran agree to a ceasefire on their earlier ‘ceasefire’ that was looking at lot like a war over Hormuz

Stock futures rallied on Sunday evening after the U.S. and Iran appeared to step back from a weekend of escalating violence in the Persian Gulf.

Futures tied to the Dow Jones industrial average rose 128 points, or 0.25%. S&P 500 futures were up 0.38%, and Nasdaq futures added 0.35%.

But energy markets were still a little spooked as the mere threat of continued fighting around the Strait of Hormuz threatens the nascent recovery in ship traffic through the vital chokepoint.

U.S. oil futures climbed 0.33% to $69.46 a barrel, while Brent crude was flat at 1.1% to $71.97.

Sources told Axios that both sides agreed to halt attacks on each other and meet in Qatar on Tuesday to resolve differences over the Strait of Hormuz.

Earlier on Sunday, Iran launched new attacks on Kuwait and Bahrain, while threatening a “complete halt” to peace talks. It continuined a tit-for-tat cycle of retaliation after U.S. airstrikes punished the regime for targeting commercial ships with drones.

The renewed skirm...