FTSE 100 today: Stocks slip as U.S.-Iran Gulf conflict escalates

UK equities fell on Monday, as the intensifying conflict between Washington and Tehran in the Persian Gulf and the Strait of Hormuz fueled fears of sustained crude supply interruptions, undermining risk appetite throughout European markets.

At 03:25 ET (07:25 GMT), London's FTSE 100 was down 0.13%, with Germany's DAX also losing 0.13% and France's CAC 40 edging 0.07% lower. The pound strengthened versus the dollar, as GBP/USD rose 0.077% to 1.3525.

The U.S. Central Command published video footage of the Iranian tanker M/T Kylo—also known as the “Noxen”—sinking in the Gulf of Oman following American strikes. That action was part of a broader operation that likewise incapacitated the M/T Downy near Kharg Island and the M/T Stark 1 off Jask.

CENTCOM stated that the strikes came after missiles were launched by Iran's Islamic Revolutionary Guard Corps at two U.S. Navy ships, saying the projectiles were evaded and caused no American casualties.

Tehran intends to proclaim a new restricted military zone in the Gulf and approve navigational charts for a shipping lane through the Strait of Hormuz. Iranian officials warned they would only agree to keep that vital waterway open should Washington halt its attacks and threats against the country.

These developments take place as the six-month-old U.S.-Israeli confrontation with Iran remains deadlocked. A truce reached in June has collapsed, and fresh rounds of reciprocal strikes are hampering maritime traffic.

In messages posted on X, U.S. Defense Secretary Pete Hegseth and CENTCOM Commander Adm. Brad Cooper cautioned that further retaliation was possible. The nearly identical phrasing carried across multiple media outlets pointed to a coordinated official communication rather than independent comments.

Hegseth declared: “It’s simple: if Iran shoots at U.S. ships, we will destroy (and sink) their oil tankers.” Cooper warned that Tehran would incur “an even higher economic cost” if it launched additional attacks. Meanwhile, Iran’s Foreign Ministry branded the American strikes a “war crime” and a violation of the United Nations Charter.

In a Monday note, ING commodity strategists observed that “the oil market remains well-supported with little sign of peace between the US and Iran.” They also noted Tehran’s intention to enforce a new restricted area beyond the Strait of Hormuz “could put additional vessels in the Gulf of Oman at risk.”

The strategists added that crude shipments are still moving despite the heightened tensions. The U.S. energy secretary noted that “a little more than 9 million barrels per day” are passing through Hormuz under U.S. Navy escort. Meanwhile, speculators increased their net long position in ICE Brent by 37,837 lots to 261,435 as of the most recent Tuesday.

Mohit Kumar of Jefferies pointed to Friday’s stronger-than-expected U.S. payrolls report, which put upward pressure on interest rates and weighed on risk assets, while market-implied odds of a September Federal Reserve hike climbed to nearly 60%.

Kumar further explained that Jefferies has “stayed away from long end rates since July, as we did not see an easy way out of the US Iran war.” He identified this week’s U.S. CPI report and Wednesday’s European Central Bank policy decision—along with ongoing Gulf risk—as the next key market catalysts.

According to the Saudi foreign ministry, U.K. Energy Secretary Ed Miliband and Saudi Foreign Minister Prince Faisal bin Farhan spoke by phone about de-escalation, with the ministry citing joint efforts to “enhance the security and safety of international waterways.”

Data from Lloyds revealed that British house prices decreased by 0.4% in August compared with a year earlier—the first annual drop since November 2023 and against economists’ forecasts of a 0.2% gain. Month-on-month, prices slipped 0.2%, while a modest 0.1% increase had been anticipated.

Brent crude climbed 0.95% to $97.19 per barrel, while U.S. benchmark WTI advanced 0.66% to $92.09. Gold prices fell, with December futures declining 0.74% to $4,443.59 an ounce and spot gold slipping 0.73% to $4,398.04.

TotalEnergies took a step toward a final investment decision on its Papua LNG project after reducing capital costs to approximately $14 billion by retendering contracts and optimizing design. The firm also concluded an amended gas agreement with Papua New Guinea and established an LNG marketing joint venture with Kumul Petroleum.

IQE recorded a swing to a first-half adjusted core profit of £6 million, buoyed by solid demand from AI infrastructure, data center, and defense clients. The company noted that favorable momentum persisted in the second half and reaffirmed its full-year outlook.

The Sunday Times reported that Waterland intends to submit a bid for Gamma Communications that surpasses Epiris’s £1.08 billion takeover offer. Gamma last week agreed to Epiris’s 1,120 pence-per-share proposal, while Waterland would sell two of Gamma’s divisions to Giacom should its higher offer succeed.

Standard Life posted a first-half profit that exceeded expectations, supported by growth in new business and consistent interest in pension risk transfer products. These transactions have become increasingly popular as defined-benefit pension funds look to offload liabilities to insurance companies.