Oil price tops $100 a barrel again after Trump announces strait of Hormuz blockade – business live | Business

London’s stock market has opened with a bump, as traders react to the lack of progress in the US-Iran peace talks.

The FTSE 100 index of blue-chip shares has lost 0.6% at the start of trading, falling by 67 points to 10,533 points.

AB Foods (the grocery, sugar, agriculture, ingredients and retail group) are the top faller, down 2.7%, with airlines, miners, banks and housebuilders all lower.

Energy companies are rallying, though; BP and Shell are both up more than 1%.

The surge in energy costs from the Iran war will cost a typical UK household almost £500, new research from the Resolution Foundation shows.

The Resolution Foundation have esimated that rising energy prices are likely to tip living standards growth into negative territory this year.

That’s because the increased cost of energy bills and petrol at the pump will almost certainly be passed onto households.

The typical household is now set to see its income fall by 0.6% – a difference of £480 – over the course of the current financial year, they say, Before the conflict, they were on track for 0.9% growth.

Average income growth for the poorest fifth this year is now set to be just 1.2%, down from 2.8% before the conflict.

James Smith, chief economist at the Resolution Foundation, says:

“Despite hopes for a sustained peace, the path of this conflict remains uncertain and energy prices remain well above pre-war levels, meaning many households face a decline in their purchasing power this year.

“This squeeze will run right through the income distribution. Lower-income households will still see some income growth thanks to a long-awaited rise in real benefit levels, but inflation will likely knock more than a percentage point off what they stood to gain. For those in the middle and towards the top of the income distribution, even the thin growth they had been expecting has tipped into negative territory.

“Deescalation is certainly welcome, but damage to household finances this year is to a large degree already done. The Government should act now to prepare a social tariff that reaches households falling through the cracks this winter.”

Heathrow Airport has warned that the outlook for the next few months is uncertain, due to the ongoing conflict in the Middle East.

In its latest traffic commentary, Heathrow says it is supporting airlines and passengers as they adapt to airspace closures, adding:

The knock-on impacts to global supply chains, including fuel, have not affected airport operations. Heathrow will monitor the situation and liaise with Government and airlines to protect passengers’ journeys.

The US dollar is rallying as a sharp risk-off move ripples across markets.

The dollar index, which tracks the greenback against a basket of other currencies, has gained 0.35% this morning.

The pound is down half a cent, to just above $1.34.

The price of wholesale gas has also risen this morning.

The month-ahead US gas contract is up 9% to 119.50 a therm, its highest level since last Tuesday (before Donald Trump announced the two-week ceasefire with Iran).

Before the conflict began at the end of February, gas was trading below 80p a therm, before hitting 180p/therm in mid-March.

Every barrel of risk added to oil markets carries an inflation price tag for the global economy, warns Priyanka Sachdeva, analyst at brokerage Phillip Nova:

Oil markets have decisively re-entered geopolitical mode, with prices vaulting back above the psychological $100 per barrel threshold as the United States moved to impose a naval blockade targeting Iranian shipping through the strait of Hormuz.

Both benchmarks, WTI and Brent, opened gap-up and currently hover with almost 8% gains. The market reaction underscores a simple but powerful reality: Hormuz risk is not theoretical; it is structural, and it is real.

The latest catalyst came after talks mediated by Pakistan failed to produce a durable agreement, prompting the U.S. to announce enforcement of maritime restrictions on vessels moving to and from Iranian ports. The mere threat of enforcement alone has been sufficient to re-price risk, demonstrating how vulnerable oil remains to geopolitical triggers.

The breakdown of US-Iran peace talks last weekend has only led to modest losses in Asia-Pacific markets.

Japan’s Nikkei index is down 0.75%, while Hong Kong’s Hang Seng index and the South Korean KOSPI have both dropped by 1.15%.

Michael Brown, senior research strategist at brokerage Pepperstone, says:

While crude has advanced, and stocks slipped a touch, the overall market reaction to the weekend news of a US Navy blockade of the strait of Hormuz has been relatively contained, as participants view the move largely as a negotiating gambit from President Trump.

While it’s clearly a risk-averse start to the trading week, amid President Trump’s announcement of a Navy blockade in the strait of Hormuz, the general market reaction can be summed up as ‘could be worse’.

The US blockade of the strait of Hormuz is a blow to the 20,000 seafarers who have been trapped in the Gulf for the last six weeks.

One told us last week:

“I gave my notice exactly one month ago. I’ve informed the master, I’m not willing to sail through the strait. It’s about safety, it’s all about safety.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We start a new week, again, with an escalating conflict in the Middle East, after the collapse of US-Iran peace talks last weekend.

Donald Trump’s threat to impose a blockade on the strait of Hormuz has driven the oil price back over $100 a barrel again this morning, as hopes of an end to the conflict soon take another knock.

Brent crude, the international benchmark, has jumped by 7% to $101.88 a barrel, while US crude is up over 8% to $104.69 a barrel – back towards the highs of almost $120 set early in the conflict.

The US president also said he had asked the US Navy to “interdict” any ship that had paid a toll to Iran for passage through the strait, in an attempt to choke off the flow of Iranian oil.

Tony Sycamore, market analyst at IG, says:

By doing so, the US aims to force Tehran’s allies and customers to put pressure on Iran to reopen the vital chokepoint, potentially resolving the impasse without committing ground forces to another protracted conflict.

This approach will undoubtedly strain Iran’s relationship with its largest customer, China. Having already lost Venezuelan supply earlier this year, Beijing now faces the potential loss of another roughly 2m barrels a day.

The war has already driven confidence across Britain’s biggest companies down to a six-year low.

Deloitte’s quarterly survey of chief financial officers has found that concerns around energy prices, inflation and interest rates surging after the Middle East conflict, to its lowest level since early in the Covid-19 pandemic in 2020.

The agenda