The FTSE 100 closed down 1.3% at 10,669.32, hitting a seven-week low as escalating military strikes in the Gulf sent crude prices surging above $100 for the first time since late July. Europe's major indices broadly followed suit, with Germany's DAX falling 1.66% to 25,576.45 and France's CAC 40 dropping 1.9%. The Euro Stoxx 50 slipped 1.58% to 6,311.75.
Across the Atlantic, the S&P 500 fell 0.48% to 7,636.36 and the Dow Jones dipped 0.77% to 52,380.66. Asia's Nikkei 225 eased 0.27% to 64,968.00. Sterling edged up 0.1% to $1.3553.
Brent crude extended gains to $101.40 a barrel, rising 3.6% and breaking above the $100 threshold for the first time in months. West Texas Intermediate gained 3.8% to $96.59. Gold futures added 0.1% to $4,444.40, while spot gold climbed 1% to $4,397.18.
The oil rally came after a night of intensified conflict in the region. The US military reported destroying five Iranian crude oil carriers near Kharg Island overnight, following an IRGC ballistic missile strike on a US Navy warship. CENTCOM stated that 10 Iranian tankers had been destroyed in the past week and rejected Iranian claims that two US destroyers had been hit, saying "No US Navy warship has been struck. All IRGC attempted attacks failed."
Meanwhile, the IRGC announced it would formally declare a maritime restricted zone stretching from Chabahar into the Gulf of Oman and the Arabian Sea. The UK Maritime Trade Operations reported that several merchant vessels had been disabled and a cargo vessel was listing off the UAE after being struck by a projectile. A tanker carrying 2 million barrels of Iraqi crude was also targeted at the port of Khor al-Amaya in Basra's territorial waters.
Iran also targeted the al-Azraq airbase in Jordan. Amman said it intercepted 18 of 20 missiles fired, while Washington described the strike as "ineffective" with no US casualties reported.
Shipping disruption is already significant. According to ING Think, flows through the Strait of Hormuz are running at roughly 10 million barrels per day — approximately half of pre-war levels. ING noted the market is "likely to continue to price in a sizeable risk premium" with no credible de-escalation path visible.
In corporate news, Aberdeen named former Sampo CEO Torbjörn Magnusson as chair-designate and non-executive director, succeeding Douglas Flint, who plans to step down at the April AGM. Magnusson previously led Sampo's strategic transformation, including its £1.7 billion acquisition of Hastings Group. Energean reported a 45% rise in first-half profit, supported by Italy deferred tax assets, and maintained its annual output forecast after restarting its Israeli operations.
On the policy front, the UK announced a ban on imports from illegal Israeli settlements in the occupied West Bank. Foreign Secretary Ed Miliband called Israel's retaliatory closure of the British consulate in Jerusalem "regrettable and damaging," adding that "we weighed up the costs and the benefits in advance."
