The FTSE 100 falls triggered by an oil surge past $100 a barrel sent London’s blue-chip index to its lowest close in recent months on Wednesday, as the US military’s destruction of five Iranian oil tankers sent Brent crude racing above a psychologically charged threshold and reignited fears of sustained inflation.
Brent crude, the international benchmark, is priced per barrel and reflects the cost of oil traded globally. When it climbs sharply, the knock-on effect on fuel, transport and manufactured goods tends to push consumer prices higher, pressuring central banks to raise interest rates.
The London Stock Exchange‘s FTSE 100 index closed down 141.60 points, or 1.3%, at 10,670.06. The FTSE 250 ended down 240.19 points, 1.0%, at 24,108.66, and the AIM (Alternative Investment Market) all-share closed down 0.50 points, 0.1%, at 796.25.
Named tankers destroyed as FTSE 100 falls on oil surge fears
According to BBC News, the US military’s Central Command said its strikes destroyed four Iranian oil tankers linked to Iran’s Islamic Revolution Guard Corps (IRGC) in the Gulf of Oman: the Kaviz, Charminar, Horizon 1 and Riesco. A fifth tanker, the Derya, was struck near Kharg Island. The strikes followed retaliatory threats from Iran and a wave of missile and drone attacks by Iran-aligned Houthi militants on several Saudi Aramco energy facilities.
US Secretary of State Marco Rubio made the policy behind the operation explicit. ‘Iran continues to try to hit US naval ships, and for every time they do that or try to do that, they’re going to lose tankers, and I think you’ll see that again today,’ he said, according to RFE/RL.
The conflict has effectively closed the Strait of Hormuz, the narrow waterway in the Gulf through which 20% of the world’s oil and liquefied natural gas (LNG) shipments usually pass, BBC News reported. Iranian missile and drone attacks on commercial shipping, combined with a US naval blockade of Iranian ports, have severed one of the planet’s most critical energy routes. The US-Iran conflict is now in its seventh month and, despite White House claims that a deal is imminent, shows little sign of easing.
The Wall Street Journal reported that front-month Brent crude settled up 3.4% to $101.21 a barrel on Wednesday, while front-month West Texas Intermediate (WTI) crude futures rose 3.2% to $96.05 a barrel, the highest closing levels for both benchmarks since 22 May. At the London equities close, Brent was quoted at $101.07 a barrel, up from $98.00 late Tuesday afternoon.
Oil majors rise as London’s broader market retreats
Not every stock on the FTSE 100 suffered. Oil majors benefited directly from the crude rally: BP topped the blue-chip index, up 1.3%, while Shell climbed 0.1%. Technology services provider Computacenter also recovered ground, rising 0.5% after closing down 9.0% the previous session.
Among the worst performers, Autotrader Group fell 4.7%. Burberry dropped 4.0% after HSBC cut the luxury retailer to ‘hold’ with a 1,200p price target.
On the FTSE 250, NCC Group fell 6.7%, while Funding Circle Holdings closed down 6.1%, extending losses following news that chief executive Lisa Jacobs will leave the company in 2027. Goodwin shares fell a further 3.5% after the mechanical and refractory engineering company confirmed the sale of a substantial part of its Mechanical Engineering division to an affiliate of New York-based Cerberus Capital for up to £1.10 billion.
Among smaller companies, Sutton Harbour jumped 38%, while Caledonian Holdings surged 20% after its wholly owned subsidiary, Aspire Commerce, completed the commercial launch of an enhanced multi-currency business current account. Mortgage Advice Bureau fell 20% after lowering its full-year guidance, citing a weaker housing market and fewer customers entering its Fluent division.
In currency markets, the pound was quoted at 1.3554 dollars at the London close, up slightly from 1.3548 dollars on Tuesday. Against the euro, sterling edged up to 1.1644 from 1.1643. Gold fell to $4,420.33 an ounce, down from $4,494.00 on Tuesday.
European markets also declined. The CAC 40 in Paris closed down 1.9% and the DAX 40 in Frankfurt ended down 1.7%. In New York, the Dow Jones Industrial Average was down 0.8%, the S&P 500 down 0.5%, and the Nasdaq Composite down 0.7%. Investors now await Friday’s US consumer price index (CPI) report, which is seen as a key input to whether the Federal Reserve raises interest rates the following week. The European Central Bank (ECB) is widely expected to announce an interest rate decision on Thursday.
