Oil Surges Toward $120 as Trump Weighs Fresh Iran Strikes

Oil jumped on Friday as renewed fears of US strikes against Iran and a tanker attack in the Strait of Hormuz revived concerns over a Gulf supply shock. The FTSE 100 closed modestly higher on Thursday as a record profit at Shell offset a slump in Haleon, while Wall Street fell as Alphabet's AI spending spooked investors. The dollar eased and gold slipped near $4,000 an ounce, with Exxon and Chevron due to report third-quarter earnings later on Friday. 

Equities 

The FTSE 100 closed up 0.26% on Thursday, while the midcap FTSE 250 also firmed, as investors worked through a packed day of UK corporate earnings. Energy stocks led the gains even as oil prices eased slightly on the day, before jumping again on Friday on fresh Middle East tensions. 

Shell rose after reporting its highest quarterly profit since 2022 and lifting its share buyback programme. Haleon slumped 15%, its biggest one-day fall since listing, after the consumer-health group cut its organic revenue growth forecast, a day after GSK's own results also disappointed. 

Lloyds Banking Group fell after muted third-quarter results dragged on the wider banking sector. BAE Systems and Rolls-Royce extended Wednesday's gains after finance minister John Healey said defence spending would be reprioritised to cover a £4.7 billion gap in Britain's Defence Investment Plan, while WPP rose after flagging a smaller-than-expected revenue decline and a turnaround plan still on track. 

On Wall Street, the Dow fell 0.25%, the S&P 500 lost 0.30% and the Nasdaq dropped 1.37% on Thursday, as a disappointing Alphabet earnings report revived worries about big tech AI spending. Alphabet fell 12.6% after its revenue miss was compounded by a sharp rise in AI-related cash burn. 

Intel tumbled after the bell on weak results and guidance, dragging other chipmakers lower, while Fortinet and ServiceNow both slumped more than 20% after their own quarterly updates disappointed investors. Marvell Technology fell 13.2% on reports it is in advanced talks to buy optics maker Lumentum Holdings. 

Caterpillar fell despite beating profit estimates, as it left its full-year growth targets unchanged, while Ford jumped 12.4% on a third-quarter revenue beat. Eli Lilly rose after lifting its revenue outlook on strong weight-loss drug sales, and Merck rose after beating earnings expectations on strong sales of its cancer drug Keytruda and HPV vaccine Gardasil. Amazon slipped in after-hours trading on disappointing holiday-quarter guidance. 

Forex & Commodities 

The dollar index fell 0.23% on Thursday to 101.88 after the Federal Reserve held interest rates steady and solid US GDP data left policymakers room to wait before moving again.  

It eased further on Friday as a renewed sell-off in AI-linked shares drove a flight into US Treasuries, while the Bank of Japan also held rates steady and flagged further tightening ahead, lifting the yen.  

It was the fourth central bank decision of the week, with the ECB, the Fed and the Reserve Bank of New Zealand all leaving borrowing costs unchanged; the Bank of England and the Reserve Bank of Australia are next up, with decisions due next week. 

Sterling held firm near $1.34 against the dollar, on track for a modest gain this month. The euro edged higher after the European Central Bank left its key rate at 2.5% on Thursday, with president Christine Lagarde confirming she will leave her post in February. 

Gold slipped to around $4,000 an ounce as firmer oil prices and robust US inflation data reinforced bets on a Federal Reserve rate increase in December. Bullion remains on track for a second straight monthly decline. 

Oil pushed higher, with Brent approaching $116 a barrel and US crude near $103, after senior US military officials briefed President Trump on potential strikes against Iran and a tanker was attacked in the Strait of Hormuz. Diplomatic efforts are continuing in parallel, with US officials reaching out to Tehran, but Brent remains on track for an 11% gain this month, its fourth straight monthly rise, as the Gulf conflict keeps supply risks elevated.