FTSE 100 Sinks Amid Rising Tensions Over Iran and Strait of Hormuz
UK stocks took a hit on Wednesday as investors struggled to shake off concerns over Iran and the Strait of Hormuz. The FTSE 100 fell 0.1%, while Germany's DAX slipped 0.2% and France's CAC 40 dropped 0.5%. Despite fresh US inflation data showing a slowdown in consumer prices, geopolitical tensions dominated market attention.
The US inflation report showed that consumer prices increased 0.1% in July from the previous month, matching market forecasts. On an annual basis, inflation slowed to 3.4% from 3.5%. However, investors' focus quickly shifted back to the Middle East as tensions around the Strait of Hormuz continued.
The waterway is a crucial route for oil shipments, and any disruption can push prices higher. The US military disabled the Panama-flagged cargo vessel M/V Vela Nova in the Gulf of Oman after it attempted to breach the US blockade on Iran-bound shipping. Meanwhile, US President Donald Trump warned Iran against retaliation, saying the US currently has total control over the Strait of Hormuz.
Oil prices rose during the session, with Brent crude increasing 0.13% to $89.02 a barrel and West Texas Intermediate gaining 0.36% to $83.50. The International Energy Agency cut its 2026 global oil demand forecast again, expecting a decline of 1.6 million barrels per day.