ftse100 moved sharply as global markets reacted to renewed Middle East hostilities and a spike in energy prices on Wednesday. UK and US stock markets rose while several Asian indexes plunged, and shipping through the Strait of Hormuz has almost entirely halted, choking a major artery for oil and gas. The disruption—from military strikes, threats to vessels and trimmed production—has left benchmark crude and gas far above pre-conflict levels and left investors bracing.
Markets and Oil: Immediate Moves
UK and US major indexes rose on Wednesday even as Asian markets tumbled for a third consecutive day. Oil and gas prices remain volatile: Brent crude prices have jumped by 12% since the start of the recent strikes and responses, and benchmark UK gas has surged more than 60% since the conflict began, closing at 128p per therm by the end of trading on Wednesday (ET), below a Tuesday high of 170p.
Shipping through the Strait of Hormuz—through which around a fifth of the world’s oil and gas normally flows—has almost entirely halted after threats and attacks linked to the conflict. Lloyd’s List Intelligence estimates roughly 200 tankers are effectively stranded, and insurance premiums have climbed sharply, especially for vessels considered American, British or Israeli. State-run QatarEnergy has suspended some LNG production, and Saudi Arabia’s defence ministry said there was an attempted drone attack on a major oil refinery this week.
Ftse100 and UK exposure
The ftse100, which tracks the largest firms listed in London, has been caught between a flight to safe havens and renewed risk aversion. Market anxiety deepened after producers trimmed output and global buyers rerouted or paused shipments. Last week the index experienced heavy selling, underscoring the sensitivity of UK markets to energy disruption and global risk sentiment.
High energy costs present a direct inflation risk for the UK. David Miles, committee member at the Office for Budget Responsibility, said the rate of inflation will increase in the UK if oil and gas prices stay high for a sustained period of time, while stressing the current rises are nowhere near the scale seen after a prior major European conflict. Miles estimated that if prices remained at current elevated levels, the impact on the overall level of UK prices could be roughly 1%.
Immediate reactions and what happens next
President Donald Trump said the US would offer risk insurance for tankers “at a very reasonable price” and would use the Navy to protect oil tankers “if necessary”. Investment strategist Lindsay James at Quilter warned markets may be overly optimistic about reopening supply lines, saying shipping companies, insurers and crews will likely be reluctant to resume traffic and that naval escorts are not a guaranteed solution: “It’s not really feasible to think that that is going to be the solution to reopening energy supplies, ” she said.
Looking ahead, traders and policymakers will watch insurance moves, naval responses and any further production cuts closely; sustained high energy prices would lift inflationary pressure and keep volatility elevated. The ftse100 will be sensitive to any new developments in shipping safety, supply decisions by major producers and further moves in crude and gas benchmarks—factors that will determine whether current market reprieves hold or give way to another sell-off.
