On a rain-slick morning on London’s trading floor, the ftse 100 flickered between green and red as screens tracked an escalating oil price and shipping routes grinding to a halt. Traders, risk managers and energy buyers kept one eye on crude benchmarks and another on statements from officials, aware that every spike can ripple into prices for households and businesses.
Why did the Ftse 100 wobble this week?
Markets moved unevenly: UK and US stock markets rose on one trading day while several Asian indexes plunged for a third day, and the ftse 100 itself has shown sharp swings. Earlier in the week the FTSE 100 fell over five percent to 10, 269. 18p as investors fled to safe havens; by midweek it rose after two days of sliding share prices. The pattern reflects a broader market nervousness tied to the unfolding conflict in the Middle East and the immediate impact on energy supply lines.
“Markets had taken an ‘optimistic view’ of the situation, ” said Lindsay James, investment strategist at Quilter, adding that Iran is well equipped to threaten ships using the key strait. “Shipping companies, insurers, crew members, potentially, are probably going to be reluctant to do this… It’s not really feasible to think that that is going to be the solution to reopening energy supplies. ” Her assessment underscores why equities tied to global trade and energy can move sharply when shipping lanes and insurance costs are in flux.
How high have oil and gas prices climbed, and what does that mean for inflation?
Oil and gas markets have been volatile. One measure of Brent crude has jumped by 12% since a series of strikes began, and other coverage of market moves recorded intraday rises as much as 20% with US crude futures rising above $100 to about $115 in some trading. UK gas prices have surged more than 60% since the conflict began, closing at 128p per therm after peaking at 170p the previous session.
David Miles, committee member at the Office for Budget Responsibility, warned that sustained high oil and gas prices would raise the rate of inflation in the UK. He noted that current increases were “nowhere near as large” as those seen after Russia launched its full-scale invasion of Ukraine, but he estimated that if prices stayed at current levels the impact on the level of prices in the UK would be around 1%.
What are governments and companies doing in response?
Responses have ranged from production halts to security pledges. QatarEnergy suspended production of liquefied natural gas, while Saudi Arabia’s defence ministry reported an attempted drone attack on its Ras Tanura oil refinery. Shipping through the Strait of Hormuz has almost entirely halted, with Lloyd’s List Intelligence estimating about 200 tankers effectively stranded and insurance premiums rising significantly, especially for vessels considered American, British or Israeli.
President Donald Trump said the United States would provide risk insurance “at a very reasonable price” and would use the Navy to protect oil tankers “if necessary. ” That proposal raised immediate questions about operational feasibility: details of how an escorted supply corridor would work were not outlined, and some market participants remained skeptical that escorts alone could reopen energy supplies quickly or safely.
Back on the trading floor, the opening morning scene holds a new weight. Screens still show volatile spreads between winners and losers, and the trader who started the day watching an index inch higher now looks up again as crude ticks upward. The longer oil and gas prices stay elevated and shipping remains constrained, the clearer it becomes that the ftse 100’s swings are not just technical blips but reflections of a deeper supply shock whose full economic effects are still unfolding.
