European equities steadied on Tuesday after early losses, as concerns grew that a fragile ceasefire between the United States and Iran could be breaking down into renewed conflict.
By 08:37 GMT, the pan-European Stoxx Europe 600 was up 0.6%, while Germany’s DAX gained 0.8% and France’s CAC 40 rose 0.7%, all recovering from earlier declines. The UK’s FTSE 100 lagged behind, falling 0.8%.
Escalation Raises Concerns Over Global Oil Supply
Fresh hostilities erupted on Monday, with both sides launching attacks after Tehran responded to efforts by U.S. President Donald Trump to reopen shipping lanes through the Strait of Hormuz, a key route for around 20% of global oil flows.
Reports emerged of fires and explosions affecting merchant vessels in the Gulf. The U.S. said it had successfully escorted two American-flagged ships through the strait, despite facing attacks from Iranian drones and small armed boats.
The situation also escalated across the wider Middle East. In the United Arab Emirates, air defence systems intercepted missiles and drones launched from Iran, while an oil terminal in Fujairah was targeted.
Oil Prices Remain Elevated
For much of the conflict, now spanning more than two months, tanker traffic through the Strait of Hormuz has been severely disrupted due to the threat of Iranian strikes. This has driven oil prices sharply higher, raising concerns about inflation and its potential impact on global economic growth.
Brent crude futures slipped 0.8% to $113.56 per barrel but remain significantly above pre-conflict levels.
Trump, facing mounting domestic pressure over the situation, has provided limited details about efforts to reopen the shipping route under the plan known as “Project Freedom,” while Iran’s foreign minister warned against the U.S. becoming entangled in a “quagmire.”
Stock Movers
Among individual stocks, HSBC Holdings plc (LSE:HSBA) fell more than 5% after reporting first-quarter profit below expectations, largely due to a $400 million charge linked to a fraud case in the UK.
In contrast, Anheuser-Busch InBev SA/NV (EU:ABI) gained ground after posting quarterly earnings that exceeded forecasts.
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