FTSE 100 Edges Lower on Rising Oil Prices and Geopolitical Tensions

The FTSE 100 index closed lower on Wednesday due to concerns about rising oil prices and geopolitical tensions. The index traded around 10,830 in early dealings, extending its subdued run this week after falling 0.17% on Tuesday.

The move left the FTSE 100 below its July record near 10,991, despite the broader European market hovering close to all-time highs. Germany's DAX was modestly higher, France's CAC 40 slipped, while the STOXX Europe 600 was little changed near 661.

Brent crude climbed towards $90 a barrel after fresh attacks on commercial shipping and fading hopes that the US and Iran would quickly agree on reopening the Strait of Hormuz. This mixed setup for the FTSE 100 could provide some protection when oil rises, but expensive crude also revives inflation concerns and threatens margins across transport, retail, and consumer businesses.

The tension was visible across Europe, with energy shares rising about 0.7%, making them the strongest STOXX 600 sector, while automobiles and parts fell around 0.8%. The geopolitical backdrop has also broadened beyond Hormuz, with a Houthi attack on a cargo vessel in the Red Sea killing crew members, North Korea launching another ballistic missile, and Taiwan criticising planned Chinese naval drills near its east coast.