European Stocks Muted, Oil Prices Surge as Strait of Hormuz Tensions Escalate

European stocks traded cautiously on Tuesday, with gains in the energy sector offset by broader market anxiety after fresh attacks on Saudi Arabian energy infrastructure heightened geopolitical risk and disrupted shipping through the Strait of Hormuz.

By 03:28 ET (07:28 GMT), the UK's FTSE 100 was nearly flat, up just 0.02%, while Germany’s DAX fell 0.15% and France’s CAC 40 lost 0.27%, according to Investing.com data.

Energy Markets on Edge

The cautious sentiment followed confirmation from Saudi Arabia's Energy Ministry that Houthi forces had struck multiple energy facilities in the country's southern region, causing fires and injuries. The Saudi-led coalition described the assault as a "dangerous escalation."

These tensions are directly impacting one of the world's most critical oil chokepoints. Key developments include:

• Shipping data compiled by Kpler showed just seven commodity vessels transited the Strait of Hormuz on Monday, below the 10-day average of 10 ships, marking the lowest level since May.
• Qatar’s Foreign Ministry warned of a potential "industrial catastrophe" if the crisis persists, according to U.S. media reports.
• The U.S. State Department pledged to take "decisive measures," stating it would not permit Iran to "hold the global economy hostage."

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Oil Jumps, Broader Markets Await Data

The disruption sent crude oil prices sharply higher on supply concerns. Brent crude futures rose 1.72% to $98.67 a barrel, while West Texas Intermediate (WTI) gained 2.94% to $94.17.

Beyond energy, investors remained in a holding pattern as U.S. markets reopened after the Labor Day holiday. The market is looking ahead to a data-heavy week, with the European Central Bank's policy meeting on Thursday and the release of the U.S. Consumer Price Index on Friday, which will be critical for gauging inflation and future interest rate policy.

In other commodities, copper on the London Metal Exchange touched a new record of $14,626 a tonne, driven by tight global supply and expectations of expanded U.S. tariffs on imports.