FTSE 100 Edges Higher as Oil Prices Surge on US-Iran Military Action

London's FTSE 100 index edged higher on Monday, with gains in major energy companies outweighing broader market caution after an escalation in Middle East tensions sent crude oil prices surging.

Geopolitical Tensions Drive Oil Higher

The U.S. military conducted a new round of strikes against Iran on Sunday, an action U.S. Central Command stated was intended to degrade Tehran's ability to target commercial shipping. The strikes follow an alleged Iranian attack on a container ship last week and are part of a series of military actions in the region.

The escalation fueled fears of supply disruptions in the critical Strait of Hormuz. In response, Brent crude jumped 3.8% to $78.86 a barrel, while West Texas Intermediate (WTI) gained 3.7% to $74.06 a barrel. Reports on the status of the strait were conflicting; U.S. President Donald Trump told NBC the waterway remained open, while Iran's Persian Gulf Strait Authority said passage was closed pending a security review, according to Investing.com.

Market Reaction

The energy-heavy FTSE 100 closed up 0.07%, as the rally in oil prices boosted shares of its constituent oil and gas giants. This performance contrasted with broader European markets, which fell amid the risk-off sentiment. Germany’s DAX slipped 0.16% and France’s CAC 40 was down 0.20%.

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Other assets saw mixed movement:

• The British pound eased against the dollar, with GBP/USD down 0.16% to 1.3386.
• Gold, typically a safe-haven asset, saw prices fall, with gold futures declining 1.2% to $4,065.02 an ounce.

UK Corporate Updates

In individual company news, several firms provided positive updates to the market. Recruitment firm PageGroup reported second-quarter gross profit that beat expectations, citing strength in the Americas and Asia. Meanwhile, both ME Group and financial trading platform Plus500 reaffirmed their full-year guidance.