FTSE 100 rises on oil supply fears, GBP weakens as Brent climbs 4.4%

The FTSE 100 index advanced 0.5% on Monday, recovering from a recent low, as concerns over oil supply tightened markets. Brent crude futures rose 4.4% to around $80 per barrel, while U.S. WTI crude climbed 4% after a series of disruptions in the Middle East disrupted export routes. Energy majors Shell and BP gained 1.6%, while defensive stocks like Unilever rose 3%. However, London-listed miners Antofagasta and Rio Tinto fell amid weaker metal prices. Sterling weakened 0.3% against the dollar, trading at 1.3491, as geopolitical tensions persisted. The International Energy Agency (IEA) further reduced its 2026 oil demand forecast by 940,000 barrels per day, projecting a 2.5 million b/d annual decline, while 2027 demand growth was forecast at 2.6 million b/d. Gasoil crack spreads hit record highs near $84/bbl, and U.S. diesel prices remained elevated above $110/bbl, reflecting broader supply constraints. The U.S. Central Command redirected over 100 commercial vessels under its blockade of Iranian ports, while Oman postponed a Gulf-Iran Strait of Hormuz meeting due to lack of consensus. Saudi Arabia suspended its 7 million b/d East-West pipeline following recent attacks on its energy infrastructure. Meanwhile, the UK’s Prime Minister Andy Burnham hosted a Downing Street roundtable with business leaders, entrepreneurs, and local mayors, emphasizing a push for economic reindustrialization. Chancellor John Healey’s first budget, due October 28, will be shaped by rising borrowing costs and the economic fallout from the Iran war. ING’s commodities strategists noted that delays in de-escalation efforts extended uncertainty, while the IEA’s revised demand outlook underscored tighter market conditions ahead.