Rising crude oil prices lifted energy stocks like Shell, BP, and TotalEnergies, while markets also awaited comments from European Central Bank official Isabel Schnabel for further guidance on interest rates.
FTSE 100 Falls as Oil Prices Surge
The FTSE 100 traded slightly higher on Monday despite investors retreating from risk assets after an escalation in Middle East tensions and renewed fears of disruptions to global oil supplies. European equities broadly weakened despite gains in energy stocks.
FTSE 100 Index price over the past day (Source: Google Finance)
In early trading, the pan-European STOXX 600 slipped around 0.2%, while Germany's DAX fell 0.3%, France's CAC 40 lost 0.2%, and London's FTSE 100 fluctuated between gains and losses. Investor sentiment deteriorated after geopolitical uncertainty overshadowed recent optimism surrounding European equities.
The market selloff followed Iran's announcement that it once again closed the Strait of Hormuz "until further notice" after an attack on a commercial vessel and subsequent US military strikes. Although US Central Command said the vital shipping route is still open to lawful transit, concerns over potential supply disruptions intensified across global markets.
Oil prices reacted sharply, with Brent crude and West Texas Intermediate both climbing more than 4%. The surge boosted Europe's major energy producers, which helped offset some of the broader market weakness. Shares of Shell rose 0.9%, BP gained 2.1%, and TotalEnergies advanced 1.83% as investors anticipated stronger earnings from higher crude prices.
BP share price over the past day (Source: Google Finance)
The latest decline reverses some of last week's recovery, when European markets were supported by hopes of diplomatic progress and continued strength in artificial intelligence-related technology stocks. Now, the new geopolitical risks once again shifted investor focus toward inflation concerns and the potential economic impact of sustained higher energy prices.
Investors will also closely monitor remarks from European Central Bank Executive Board member Isabel Schnabel later in the day for further insight into the outlook for interest rates.
