UK equities traded in volatile fashion on Monday, with the FTSE 100 moving between gains and losses as a sharp decline in crude oil prices weighed on heavyweight energy shares. The drop in oil producers offset improved investor sentiment after the United States opted to pursue diplomatic talks with Iran instead of immediate military action.
The FTSE 100 was down 0.02% in early trading, underperforming other major European indices. Germany’s DAX rose 1.31%, while France’s CAC 40 gained 1.0%. Sterling weakened 0.13% against the U.S. dollar to $1.3466.
Energy Sector Under Pressure as Crude Prices Slide
Oil stocks led the declines after Brent crude fell 4.8% to $83.69 a barrel and West Texas Intermediate (WTI) dropped 5.9% to $79.66.
Among the largest fallers, Shell (LSE:SHEL) declined 1.1%, while BP (LSE:BP.) lost 2.03%. Mid-sized producers also traded lower, with Ithaca Energy (LSE:ITH) down 2.6% and Energean (LSE:ENOG) slipping 1.1%.
The weakness followed comments from U.S. President Donald Trump, who said a planned military strike against Iran had been cancelled after progress towards diplomatic negotiations. According to Trump, discussions with Iran through intermediaries were scheduled to begin later on Monday, provided conditions relating to the Strait of Hormuz and Tehran’s nuclear programme continued to advance.
Strait of Hormuz Situation Remains Uncertain
Diplomatic efforts continued over the weekend as Qatari mediators presented a revised proposal intended to restore shipping through the Strait of Hormuz. Reports indicated Iranian officials had responded positively, although significant differences remain, particularly regarding Iran’s proposal to introduce transit fees for vessels using the waterway.
Meanwhile, regional tensions have not fully subsided. An explosion was reported near the Strait of Hormuz on Sunday, while U.S. Central Command confirmed that naval operations in the area remain active, with dozens of commercial vessels redirected and several ships disabled or boarded.
Within the Gulf region, Saudi Arabia has continued to advocate diplomatic de-escalation, whereas the United Arab Emirates has argued for a firmer military response. Iranian officials also warned that the Islamic Revolutionary Guard Corps continues to assess its military options.
Gold Advances as Investors Seek Safety
Precious metals benefited from the uncertain geopolitical backdrop. Gold futures rose 0.17% to $4,114 per ounce, while spot gold gained 0.41% to trade at $4,059.11 per ounce.
AstraZeneca and easyJet Remain in Focus
Among individual stocks, AstraZeneca (LSE:AZN) dropped nearly 7% after reports that the pharmaceutical company had held merger discussions with Bristol Myers Squibb. The report indicated that talks were exploratory and may not ultimately lead to a transaction.
easyJet (LSE:EZJ) also remained in focus after extending Castlelake’s deadline to submit a firm takeover proposal until 7 August, aligning the timetable with rival bidder Apollo. The airline continues to provide both parties with access to due diligence materials after previously expressing support for Apollo’s higher £5.7 billion proposal over Castlelake’s earlier £5.5 billion approach.
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