The FTSE 100 declined 0.30% by mid-morning in London on Wednesday as Brent crude oil futures rose 0.43% to $95.06 per barrel, driven by escalating tensions between Iran and the United States.
European equities also slipped, with Germany’s DAX down 0.22% and France’s CAC 40 falling 0.16%. Sterling eased 0.12% against the dollar to $1.3501, while the U.S. dollar index held firm amid safe-haven demand.
Geopolitical developments in the Middle East intensified after Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed responsibility for drone strikes on U.S. bases in the United Arab Emirates and Iraq. Iran also reported missile strikes on a U.S. base in Jordan, though Jordanian authorities stated 10 of 13 incoming missiles were intercepted with no casualties. Separately, Iran reported 11 deaths from strikes in Khuzestan province and five fatalities at a wedding near Sirik.
Oil markets reacted to reports of projectile strikes on two tankers in the Strait of Hormuz—the Sidr and Senegal Prosperity—adding to supply disruption concerns. U.S. crude futures rose 0.06% to $90.27 per barrel, while spot gold dipped 0.02% to $4,327.33 per ounce.
In corporate news, BP appointed Ian Tyler as board chairman, with Amanda Blanc set to step down as an independent director once a successor is named. BP’s shares gained 0.30%. Ryanair reduced its fiscal 2027 passenger target to 214 million from 216 million, citing unhedged oil exposure and warning of higher short-haul fares.
Analysts at Jefferies maintained a view that the Federal Reserve is unlikely to hike rates in September, though the probability of a December move has risen amid elevated geopolitical risks. ING highlighted the geopolitical risk premium now embedded in oil prices following the tanker incidents.
