London equities declined on Wednesday after overnight strikes between Iran and the U.S. heightened regional tensions, lifting crude prices and pressuring risk sentiment. The FTSE 100 fell 0.30% to 10,757.41 by 07:18 GMT, with futures indicating a 0.35% decline at 10,772.50.
Brent crude oil futures rose 0.37% to $95 per barrel, while U.S. crude (WTI) increased 0.06% to $90.27. The upward move in energy prices weighed on European benchmarks, with Germany’s DAX down 0.22% and France’s CAC 40 falling 0.16%. Sterling also slipped 0.12% against the dollar to $1.3501.
The escalation followed a series of cross-border strikes. Iran’s Revolutionary Guard claimed it targeted U.S. bases in the UAE, including al-Dhafra and al-Minhad, though Emirati authorities did not confirm the incidents. Kuwait reported a drone strike caused a residential fire in Kuwait City, which was extinguished without casualties. Iran also stated it struck Erbil in Iraq and a U.S. base in Jordan, where Amman’s military said 10 of 13 missiles were intercepted with no reported injuries.
U.S. Central Command reported Tuesday strikes on Iranian air defense, radar, and communications sites. Iran alleged five deaths and roughly 50 injuries at a wedding near Sirik, while separate strikes in Khuzestan were said to have killed 11 people. President Trump warned on social media that Iran faces a response, stating U.S. control over the Strait of Hormuz and describing Tehran’s economy as "totally collapsing."
In corporate news, BP appointed Ian Tyler as board chairman, while Amanda Blanc will step down as an independent director upon the appointment of a successor. Ryanair reduced its fiscal 2027 passenger target to 214 million from 216 million, citing high unhedged oil prices and warning of higher short-haul fares.
Analysts at Jefferies noted the Federal Reserve’s September rate-hike expectations remain unchanged despite rising geopolitical risks, though the bar for a hike has fallen following recent comments. Fed Governor Kevin Warsh’s remarks on credibility were cited as a factor in the assessment.
