FTSE 100 Live: Stocks Slide as Bond Rout Deepens; Oil Jumps as Trump Vows More Strikes on Iran
Key Takeaways
- •Brent crude climbed above $91 per barrel on Tuesday, extending gains as Middle East tensions escalated.
- •The US struck Iranian rocket launchers preparing to lay mines in the Strait of Hormuz, the first exchange of fire in more than a month, and Iran responded by targeting US bases in Jordan and the UAE.
- •Senior market analyst Achilleas Georgolopoulos said the oil rally lacks the momentum to surpass previous highs seen during the conflict.
- •Trump indicated military action is back on the table after previously shifting toward a sanctions-based strategy, vowing a hard response to Iran's retaliation.
- •Rising oil prices could benefit energy producers but raise fuel costs for airlines and retailers, with investors watching central bank statements for inflation and rate signals.
Welcome back to the City AM liveblog.
London's market is returning from the Bank Holiday break on the back foot as Middle East tensions simmer once again, sending the price of oil higher.
Brent crude, the international benchmark for oil prices, climbed above $91 per barrel on Tuesday, extending gains from the previous session. The renewal of strike action in the Middle East has raised concerns about further disruptions to energy flows from the region. The Strait of Hormuz is one of the world's most important oil transit chokepoints, and any threat to shipping there tends to ripple quickly through global energy prices.
The move follows the US launching strikes on Iranian rocket launchers that were reportedly preparing to lay mines in the Strait of Hormuz, marking the first exchange of fire in more than a month. Iran has since responded by targeting US military bases in Jordan and the United Arab Emirates.
Achilleas Georgolopoulos, senior market analyst at Trading Point, said fresh military operations were pushing the oil price higher. However, he added that the rally appeared to "lack [the] momentum" needed to push prices above previous highs seen during the conflict.
"While no one is surprised by these events, expectations for progress in the US-Oman-Iran negotiations have clearly taken another hit," he said.
The White House last week signalled it was shelving military measures in favour of a strategy to destroy the Iranian economy through enforcing sanctions. But Trump has suggested military action is back on the table following Iran's retaliation.
"We're going to hit them hard. There will be a response," Trump told Fox News. He also branded Iran "officially a failed nation without an airforce, a navy or a currency".
For London-listed stocks, renewed energy-price pressure has implications across the market: higher oil can lift energy producers, while feeding into costs for airlines, retailers and other consumers of fuel. Investors will be watching upcoming statements from central banks for signals on how persistent energy-driven inflation pressures may shape the rate outlook.
City AM will bring you the latest market updates and analysis throughout the day.
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