The FTSE 100 slipped to a week low on Thursday, dragged down by JD Sports after the retailer warned on profit, while oil prices climbed to a three-week high following President Donald Trump's threat to launch the "most crushing economic operation ever taken against any country" against Iran.

The blue-chip index — the benchmark for the 100 largest companies listed on the London Stock Exchange — fell to 10,693 around midday, a 0.46 per cent drop from Wednesday's close and a 0.7 per cent decline so far this week. The fall came after JD Sports — the so-called "King of Trainers" and one of Britain's biggest sportswear retailers — said a drop-off in US sales was set to weigh on its profit. The US is a major market for the group, and its shares tumbled by nearly 15 per cent to 79p, making it the sharpest faller on the index. Investec, Legal & General and Antofagasta were the next biggest decliners.

Oil prices surged more than two per cent to pass $94 per barrel, reaching a three-week high. The move underlines how sensitive crude remains to developments involving Iran, an OPEC producer that borders the Strait of Hormuz, the Gulf chokepoint through which roughly a fifth of the oil consumed worldwide normally passes. Crude at these levels matters beyond energy markets, as oil is a key input for fuel, transport and manufacturing costs. Overnight, Trump said in a lengthy post on Truth Social that he would initiate the "most crushing economic operation ever taken against any country" on Iran. He made his latest threat as he claimed Tehran had "failed to take" a deal, resulting in what he called "economic warfare and isolation on an unprecedented scale".

"These maniacs are on the ropes," Trump said, describing his economic measures as "historic" and having the ability to "cripple them". He warned that any country providing "any type of lifeline" to Tehran would face "tremendous economic consequences".

The UAE — long one of Iran's most important trading partners in the Gulf — has already announced a suspension of financial and economic transactions with Iran after accusing Tehran of launching ballistic missiles at its territory. The 60-day ceasefire between the US and Iran came to an end on Monday. Tehran has branded a future agreement as not dead but in a "coma". With the truce now expired, the focus falls on what form the threatened US measures take and how Tehran responds.

Figures from the International Energy Agency this week showed crude inventories increased by 4.4m barrels last week, while distillate stocks declined by 1.5m barrels to their lowest level in more than a month.

Elsewhere on the City AM liveblog:

• 9:40am: Travelodge boss quits after backlash over hotel sexual assault
• 8:50am: Standard Life eyes slice of UK pension risk-transfer market
• 7:30am: Hays swings to loss as restructuring costs rack up
• 7:15am: JD Sports cuts profit forecast
• 7:00am: Opening post

Further market updates and analysis will follow throughout the day.