Brent crude nears $98 as US-Iran strikes resume

Summary

Brent crude climbed towards $98 a barrel early on Thursday after Iran said it had targeted a US airbase in response to fresh American strikes near the Strait of Hormuz. The US dollar strengthened and Treasury yields moved higher, while FTSE futures pointed lower ahead of the European open. Asian equities fell sharply, with South Korea’s KOSPI leading declines, as investors reacted to renewed disruption in the Gulf and continued restrictions on shipping routes through Hormuz.

Equities

The FTSE 100 closed 0.13% higher on Wednesday at 10,505.01, extending its winning run to eight sessions, while the FTSE 250 added 0.25% after touching its highest level in almost three months earlier in the day. Lower oil prices supported broader sentiment after comments from US officials pointed to some progress in negotiations with Iran.

BP closed 2.7% lower on Wednesday and Shell fell 2.3% as crude prices dropped sharply on hopes that tensions in the Middle East could ease. Defence shares moved higher ahead of the signing of a UK-Poland defence and security treaty, with Rolls-Royce gaining 2.9% and the defence sector index rising 1.2%.

Hollywood Bowl surged 15.4% on Wednesday after the leisure operator reported stronger spending per game across its UK and Canadian sites and announced a new £5 million share buyback programme. Pets at Home climbed 6.5% after confirming that retail sales returned to growth in the fourth quarter and had continued to improve since the period ended.

Amazon said it invested more than £15 billion in the UK during 2025 as part of its wider £40 billion investment plan through 2027, including spending on logistics sites, studios and drone delivery trials.

In the US, the Dow Jones Industrial Average rose 0.36% to a record closing high of 50,644.28 on Wednesday. The S&P 500 edged 0.02% higher to another record close, while the Nasdaq Composite added 0.07%.

JPMorgan Chase fell 2.4% after chief executive Jamie Dimon warned that annual expenses could come in around $1 billion above previous guidance. Procter & Gamble gained 3.2% and UnitedHealth added 1.9%, helping lift the Dow.

Technology shares paused after recent gains. Nvidia closed 1% lower, Qualcomm dropped 6% and Marvell Technology lost 4.6%. The Philadelphia Semiconductor Index fell 1.4% after reaching a record high on Tuesday.

Zscaler slumped 31.5% after forecasting fourth-quarter revenue below expectations. GlobalFoundries lost 9.8% after reports that majority shareholder Mubadala Investment Company planned a $1.91 billion share sale. Bath & Body Works jumped 9.7% after quarterly sales and profits beat forecasts, while Abercrombie & Fitch also moved higher following strong quarterly earnings.

Forex & Commodities

The US dollar strengthened to a one-week high early on Thursday as renewed military action between the United States and Iran unsettled currency markets and pushed investors back towards the greenback. The dollar index rose to 99.43, close to its strongest level since 21 May.

Sterling weakened against the dollar and traded lower at $1.339 early on Thursday morning. The euro also slipped to $1.160, while the Japanese yen weakened towards ¥159.6 per dollar, close to the level that prompted intervention from Japanese authorities last month.

The Australian dollar fell to $0.7120 and the New Zealand dollar traded lower at $0.5876 as investors reacted to the latest developments in the Middle East. Bitcoin also moved lower and traded around $72,880, while ether fell to about $1,975.

Oil prices rebounded sharply early on Thursday after Iran’s Revolutionary Guards said they had targeted a US airbase in response to American strikes near Bandar Abbas airport. Brent crude rose to $97.80 a barrel, while US West Texas Intermediate crude traded at $91.99.

The move followed heavy losses on Wednesday, when both oil benchmarks dropped more than 5% on hopes that diplomatic discussions could reopen shipping through the Strait of Hormuz. Traders are also monitoring US crude inventories after industry data showed stockpiles fell by 2.8 million barrels last week, marking a sixth consecutive weekly decline.

Spot gold fell to a two-month low early on Thursday and traded at $4,376 per ounce as the stronger dollar weighed on bullion prices. Silver dropped to $72.70 per ounce, platinum traded at $1,885 and palladium fell to $1,363.