Asian shares rallied Wednesday as oil prices retreated from recent highs. Markets now focus on the U.S. Federal Reserve meeting to gauge policy amidst Middle East geopolitical tensions.
Israel intensified offensive actions against Iran, while Iran struck United Arab Emirates oil facilities. The Strait of Hormuz remains largely shut. Brent crude dropped 1 percent to $102.28 a barrel.
MSCI's Asia-Pacific index rose 1.2 percent. Japan's Nikkei rallied 2 percent. S&P 500 futures inched up ahead of Wall Street open.
JPMorgan's Natasha Kaneva warns oil could reprice higher if shipping lanes remain closed. Investors watch for Fed Chair Jerome Powell's press conference and updated economic forecasts. Rate cut projections remain uncertain amid inflation risks.
The dollar weakened against the euro. Treasury yields held steady near 4.2 percent.