FTSE 100 Opens Lower as Middle East Conflict Escalates
British equities started Tuesday on a weaker footing as the Iran conflict intensified, spreading beyond the Strait of Hormuz. Oil prices remained elevated near multi-year highs above $113 per barrel, adding pressure on markets.
At 07:10 GMT, the FTSE 100 was down 1.05%, while the British pound held steady against the U.S. dollar at 1.3539. Across Europe, Germany’s DAX edged up 0.05%, and France’s CAC 40 gained 0.13%.
Oil Prices Surge Amid Rising Geopolitical Risk
Brent crude jumped to $114.44 on Monday before easing slightly to around $113 early Tuesday. Markets are increasingly pricing in the risk of a broader conflict, as a fragile ceasefire shows signs of breaking down.
Iran-UAE Tensions Intensify
The latest escalation followed a wave of missile and drone strikes targeting the United Arab Emirates. Authorities in Abu Dhabi reported intercepting multiple projectiles, although a fire broke out at a key oil facility in Fujairah port.
Iran denied involvement, attributing the incident to U.S. actions, while the UAE condemned the attacks and signaled potential retaliation.
Military Activity Increases in the Strait of Hormuz
Naval tensions also intensified, with U.S. warships navigating the Strait of Hormuz under sustained pressure. Helicopter support was deployed as part of ongoing operations to secure the vital shipping route.
The U.S. military confirmed that over 100 aircraft are now involved in “Project Freedom,” an initiative led by Donald Trump aimed at protecting commercial shipping. Despite these efforts, vessel traffic through the strait remains largely disrupted.
Escalating Rhetoric Raises Concerns
President Trump emphasized U.S. military readiness, highlighting global deployments and available resources. He also called on South Korea to support the mission following an attack on a cargo vessel operated by a Seoul-based company.
Meanwhile, Iranian officials issued strong warnings. Parliament Speaker Mohammad Bagher Ghalibaf suggested a new phase in Hormuz dynamics, while Foreign Minister Abbas Araghchi stressed that the crisis requires a political, not military, solution.
UK Corporate Updates
In corporate news, Vodafone agreed to acquire the remaining 49% stake in its VodafoneThree joint venture from CK Hutchison for £4.3 billion, securing full ownership of the UK’s largest mobile operator with over 28 million customers.
Meanwhile, HSBC reported first-quarter pre-tax profit of $9.4 billion, slightly below expectations. The shortfall was driven by a $400 million loss linked to a UK fraud case, pushing expected credit losses to $1.3 billion.
