A proposal involving the Iran Strait of Hormuz deal dominated market sentiment on Friday, as hopes of a breakthrough helped push oil prices lower and gave London’s equity indices a modest lift, even as rising bond yields threatened to cap any gains.
The Strait of Hormuz is the narrow waterway through which a large share of the world’s oil exports passes. When access to it is threatened, energy markets move sharply, making any diplomatic development around it a direct concern for investors.
What Iran’s seven-day Iran Strait of Hormuz deal actually proposes
Iran’s foreign minister Abbas Araghchi told media outlets on the sidelines of a UN gathering that his country had submitted an offer to Washington that could reopen the strait to tanker traffic within seven days. ‘If certain conditions are met, the strait will be open within seven days and talks will start,’ he said.
According to AP News, the seven-day clock would begin as soon as the United States accepts the plan. Initial steps would take around four to five days to complete, the strait would open on the sixth day, and formal talks between Iran and the US would begin on day seven.
But a core disagreement has emerged over the order of events. The US response called for Iran to reopen the strait first, with any conditions to be implemented gradually afterwards. Iran, however, insists the conditions must be fulfilled before the strait reopens, according to Tehran Times. That gap in sequencing is not a minor procedural detail, it goes to the heart of which side would be making the first tangible concession.
Analyst Stephen Innes was sceptical about whether the proposal represents genuine progress. He said that while Iran’s seven-day roadmap sounds ‘fresh enough’ on the headline, ‘once you strip away the packaging it is basically the same [memorandum of understanding] that has been sitting on the table for weeks, only now compressed into a tighter timetable’. He added that this leaves US President Donald Trump with an ‘awkward’ trade. ‘He risks taking heavy political fire for returning to a deal critics would portray as too favourable to Iran, without necessarily getting enough immediate relief at the pump to make the concession look worthwhile,’ Innes said.
How London markets responded to the Iran Strait of Hormuz deal hopes
Brent crude fell to $106.21 a barrel in London at the equity market close, down from $107.25 late on Thursday, as the prospect of the strait reopening weighed on the oil price. That drop hit energy stocks directly: BP fell 2.3%, Shell slipped 0.8%, and Ithaca Energy dropped 3.6%.
The FTSE 100 index ended the day up 0.1% at 10,695.25, a gain of 15.26 points. For the week as a whole, the index was up 0.3%. The FTSE 250 rose 0.4% to 24,261.14, while the AIM all-share added 0.2%. On the FTSE 100, Computacenter rallied 3.2% and Glencore firmed 2.2% after UBS upgraded the stock to ‘buy’ from ‘neutral’.
Bond yields rose sharply as the session drew to a close, adding a layer of caution. The yield on the US 10-year Treasury climbed to 5.21% from 5.11%, and the 30-year Treasury yield widened to 5.52% from 5.45%. Barclays analyst Emmanuel Cau said rates are now near levels where buying equities is ‘no longer a no-brainer’, and pointed to the key question of ‘where is the breaking point?’. He added that many investors appear to be holding on in the hope of US-Iran de-escalation, but that ‘without tangible progress on that front, markets are likely to stay on edge, until at least the Q3 earnings season’.
Among other market moves, Harworth Group on the FTSE 250 rose 5.1% after Peel Holdings raised its takeover offer to a ‘best and final’ 187 pence per share in cash, valuing the property regeneration company at around £631.7 million. The new offer is 8.4% above Peel’s previous 177.5p bid and represents a 30% premium to Harworth’s closing share price on 5 August, before the offer period began. Raspberry Pi Holdings fell 5.8%, giving back some of Thursday’s 20% jump.
Separate data offered a small positive note for the UK economy. GfK‘s long-running consumer confidence index rose one point in September, continuing a slow recovery seen since April, though the index remains in negative territory at minus 13. It is the first time since summer 2024 that the index has recorded three consecutive monthly increases overall.
With next week bringing US nonfarm payrolls and euro area inflation data, Barclays’ Cau warned investors to ‘expect some further volatility’, and the unresolved gap between Washington and Tehran over who moves first on the strait means the Iran Strait of Hormuz deal remains the single biggest variable watching over markets heading into the new week.
