British shares fell on Wednesday as a fresh round of confrontations between US and Iranian forces around the Strait of Hormuz sent oil prices sharply higher and injected volatility into equity markets.
The FTSE 100 was down 0.61% at 03:16 ET (07:16 GMT). European peers also softened, with Germany’s DAX sliding 1.10% and France’s CAC 40 retreating 0.82%. The pound inched up against the dollar to $1.3358, a gain of 0.04%.
Gulf clashes and military strikes
Authorities in Bahrain sounded missile alert sirens for a third time Wednesday morning as exchanges of fire unfolded between Iran and Kuwait following a series of US strikes. Iran’s Islamic Revolutionary Guard Corps said it had targeted US military facilities in both countries, accusing Washington of breaching a ceasefire understanding. Kuwait’s Army reported its air defences were "confronting hostile missile and drone attacks."
US Central Command (CENTCOM) said late Tuesday that US forces had struck more than 80 Iranian targets, including air defences and radar sites, and destroyed over 60 small boats used by Iran’s Revolutionary Guard. CENTCOM described the action as the beginning of "a series of powerful strikes against Iran to impose heavy costs."
Separately, Washington revoked a sanctions waiver that had previously allowed Iran to sell oil, a decision the Iranian foreign ministry labelled a "clear violation" of last month’s memorandum. Parliament Speaker Mohammad Bagher Qalibaf was quoted as saying: "The era of bullying and extortion is over. It leads nowhere. We don’t fold."
Energy and commodity moves
Oil extended a strong rally in response to the escalation. Brent crude climbed 2.9% to $76.31 a barrel, while US WTI rose 2.5% to $72.46. ING commodities strategists noted the front of the Brent curve had moved back into backwardation. Data from the American Petroleum Institute showed US crude inventories fell by 400,000 barrels last week, with steeper draws in gasoline and distillate stocks.
Pressure on diesel supply was also highlighted. Intensified Ukrainian drone strikes on Russian refineries have tightened diesel availability, lifting the ICE gasoil crack back above $50 a barrel. European gas also strengthened, with TTF rising more than 4% to above 48/MWh amid below-average storage levels.
Gold posted mixed returns: futures were down 0.71% at $4,127.41 an ounce, while spot gold rose 0.28% to $4,117.09. ING strategists pointed to China’s central bank extending its gold-buying streak to a 20th consecutive month in June, with June purchases described as the largest monthly buy since late 2023. That demand was cited as a structural support even as shorter-term moves reflected evolving expectations around Federal Reserve policy ahead of the release of FOMC minutes this week.
UK corporate roundup
Several UK-listed companies reported developments that reflected mixed fundamentals across sectors.
- Unite Group announced it had secured reservations for 86% of its beds for the 2026/27 academic year, driven by robust direct-let demand, and said it was keeping its full-year earnings guidance intact.
- Jet2 reported that summer booked-to-date passenger numbers were up 7.1%, citing improving booking trends and an environment of easing geopolitical tensions that supported demand.
- IG Group proposed a strategic reorganisation that would create a new Jersey-based holding company intended to unlock shareholder value.
- Media regulator Ofcom fined Virgin Media 28 million for repeatedly obstructing customers seeking to cancel contracts between 2022 and 2024.
- Water regulator Ofwat found Severn Trent Water had breached wastewater obligations but decided not to impose a financial penalty, citing the company’s remedial actions.
- Housebuilder Vistry said it expected a first-half pre-tax loss of around 30 million and announced that its chief financial officer, Tim Lawlor, will step down.
Market context and implications
The combination of direct military strikes, retaliatory attacks, and policy moves such as the revocation of an oil sales waiver contributed to a tighter near-term energy market backdrop. That tightening was visible in crude price gains, inventory draws in the US, and signs of strain across refined fuel markets. Those developments are likely to weigh on sectors sensitive to energy costs and supply, while also affecting broader risk sentiment across equity markets.
At the same time, company-specific updates in the UK illustrated divergent trajectories: student accommodation and leisure travel reported sturdier demand, while housebuilding and certain utilities faced operational and regulatory headwinds.
Data and quotations in this report reflect market moves and company statements cited during the trading session; commodities and equities remain subject to further volatility as geopolitical and supply developments evolve.