European equity benchmarks were searching for direction at the start of trading on Tuesday as oil prices moved higher following public refusals by several U.S. allies to assist in reopening a crucial waterway south of Iran.
By 04:03 ET (08:03 GMT) the broader Stoxx 600 index had edged down 0.1% to 598.08. National benchmarks were mixed: Germany's Dax was off about 0.3%, France's CAC 40 was largely flat, while the U.K. FTSE 100 had inched up roughly 0.1%.
Brent crude futures, the global benchmark, rose sharply in early European trade, climbing 3.3% to $103.58. The move came after Japan, Germany and Australia indicated they would not join U.S. efforts aimed at unblocking the Strait of Hormuz, a narrow maritime corridor through which about a fifth of the world's oil transits.
The recent military actions in the region are part of the backdrop. Following the commencement of joint U.S.-Israeli strikes on Iran in late February, Tehran moved to close down the narrow thoroughfare by threatening to attack any vessel attempting to transit the passage. Container shipping firms, concerned for crew safety and finding it difficult to secure insurance for voyages, have stopped many sailings.
These developments have pushed oil prices higher and fed worries that energy-driven price pressure could reawaken global inflationary trends. Market participants are watching closely for any signal that elevated inflation might prompt policymakers to revisit their rate outlooks.
Against that backdrop, both the European Central Bank and the U.S. Federal Reserve are widely expected to maintain their current interest rate settings at the conclusions of respective policy gatherings this week, according to market expectations referenced in trading commentary.
Investors in European equities appeared to be balancing the immediate market impact of a stronger oil complex with the prospect that central banks will hold rates steady for the moment, leaving overall trading sentiment muted as the situation in the Gulf evolves.