A look at the day ahead in European and global markets from Rae Wee

Perhaps it's time investors abandon their hopes of a quick end to the U.S.-Israel war on Iran and price in a prolonged conflict.

U.S. President Donald Trump's latest threat to hit Iran hard over moves to stop the flow of energy supplies through the Strait of Hormuz does little to suggest that the war is, as he previously said, "very complete, pretty ​much".

And with the U.S. and Israel continuing to trade air strikes with Iran's military across the Middle East, it's difficult to fathom how things could soon blow over.

Oil prices pared early gains on Wednesday after the Wall Street Journal reported that the International Energy Agency had proposed the largest release of oil reserves in its history to bring down crude prices, though moves were choppy.

That provided some relief to battered global stocks, with indexes in Asia staging a rebound while U.S. futures pushed higher. European futures were mixed.

Still, investors remained on edge as they struggled to gauge the impact of surging energy prices on global growth and inflation, with conflicting messaging from Washington, in particular, adding to the confusion.

And then there was U.S. Secretary of Energy Chris Wright, who posted on X on Tuesday that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz, only to delete the post a little while later.

"A video clip was deleted from Secretary Wright's official X account after it was determined to be incorrectly captioned by Department of Energy staff," a department spokesperson said.

Elsewhere in markets, the Australian dollar was the big mover in Asia, as a growing number of economists tipped the Reserve Bank of Australia to raise interest rates next week.

A host of central bank meetings, including the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan, are due next week, with expectations that policymakers will strike a cautious tone or turn more hawkish given the risks of resurgent inflation should the spike in energy prices be sustained.

U.S. inflation data for February is, meanwhile, due later in the day.

Key developments that could influence markets on Wednesday:

- U.S. inflation data (February)

- Fed's Bowman speaks

- ECB's Schnabel, Guindos speak

(Editing by Kate Mayberry)