The FTSE 100 declined on Monday as falling crude oil prices weighed on major energy companies, while investors monitored diplomatic developments involving the United States and Iran and their potential implications for global energy supplies.
London’s benchmark index fell 0.25% as of 08:23 GMT, with BP (LSE:BP.) and Shell (LSE:SHEL) among the stocks under pressure. European markets also weakened, with Germany’s DAX declining 0.23% and France’s CAC 40 losing 0.20%.
Sterling strengthened 0.20% against the US dollar to $1.3415.
BP and Shell Decline as Crude Oil Retreats
Energy shares weighed on the FTSE 100 as oil prices fell amid renewed expectations of progress in indirect negotiations between Washington and Tehran.
BP shares declined 1.7%, while Shell lost 0.6%, reflecting the broader weakness in crude markets.
January Brent crude futures dropped 3.2% to $109.86 per barrel, while December West Texas Intermediate futures fell 3.5% to $100.45.
Pharmaceutical companies AstraZeneca (LSE:AZN) and GSK (LSE:GSK) also contributed to the decline in London’s benchmark index.
Gold prices moved higher, with December futures gaining 0.16% to $3,904.05 per ounce. Spot gold rose 0.53% to $3,896.51.
US-Iran Negotiations Remain in Focus
Oil markets reacted to reports suggesting that diplomatic discussions between the United States and Iran could continue following recent indirect negotiations.
An Iranian delegation departed Doha on Sunday, although Reuters reported, citing an unnamed official, that the departure was not caused by difficulties in the talks.
A draft proposal has reportedly been circulated, with a further meeting remaining possible.
Iranian Foreign Ministry spokesman Esmaeil Baghaei said progress towards an agreement would depend on the United States lifting its naval blockade and addressing Tehran’s demands.
Baghaei indicated that implementation of Iran’s seven-step proposal could be possible in the coming days, although no agreement has been confirmed.
US President Donald Trump also addressed the conflict during campaign appearances in Iowa and Kansas on Sunday, suggesting that the war could end soon while maintaining the possibility of further military action.
Strait of Hormuz Security Concerns Persist
Despite hopes of diplomatic progress, security risks around the Strait of Hormuz remain a significant concern for energy markets.
US Central Command reported that more than 20 mariners had been killed by Iran in and around the strategic waterway in recent months.
Separately, the United Kingdom Maritime Trade Operations organisation reported that two projectiles struck a tanker approximately 72 nautical miles east of Khafji at 23:47 GMT on Sunday.
All crew members were accounted for following the incident.
The continuing security concerns highlight the uncertainty surrounding regional shipping conditions, even as diplomatic efforts raise expectations of a possible reduction in hostilities.
Glencore Proposes Changes to Executive Pay Arrangements
In UK corporate developments, Glencore (LSE:GLEN) has proposed amendments to Chief Executive Gary Nagle’s remuneration arrangements.
The proposed changes would accelerate the vesting of long-term share awards in the event of a takeover and increase his potential share-based compensation.
The proposals come as the mining and commodities group reviews its executive incentive arrangements.
Ryanair Warns of Potential Pay Freeze Following Profit Decline
Ryanair (LSE:0A2U) warned that it may need to freeze employee pay as rising fuel costs threaten to exceed increases in passenger fares.
The airline reported a 6% decline in quarterly net profit to €1.61 billion.
Higher fuel expenses have increased pressure on airline operating costs, raising questions about the extent to which carriers can recover additional expenditure through ticket prices.
TotalEnergies Expands Malaysian Gas Interests
TotalEnergies (LSE:TTE) has agreed to acquire a 30% operated interest in Malaysia’s Lang Lebah and B14 offshore gas fields.
The project is expected to unlock more than 6.5 trillion cubic feet of natural gas.
The agreement represents an expansion of TotalEnergies’ upstream gas portfolio in Southeast Asia.
BP Completes Castrol Stake Sale
BP has completed the sale of a 65% stake in its Castrol lubricants business to investment firm Stonepeak.
The transaction forms part of BP’s wider portfolio restructuring and debt reduction strategy.
Former Shell Chief Executive Ben van Beurden has been appointed chairman of Castrol’s new board following the transaction.
Market Outlook
Investors remain focused on developments in US-Iran negotiations, particularly their implications for oil supplies and shipping through the Strait of Hormuz.
Further diplomatic progress could influence crude prices and the performance of major energy companies, while continued regional security incidents remain a source of uncertainty.
In the UK, movements in oil and gas shares, corporate announcements and changes in sterling are likely to remain important influences on market sentiment.
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