Shares in major UK energy companies moved lower in early London trading on Tuesday, even as oil prices recovered following overnight U.S. military strikes in southern Iran that renewed uncertainty around the stability of the fragile ceasefire and prospects for a diplomatic resolution.
Shell plc (LSE:SHEL) declined 0.40%, while BP plc (LSE:BP.) fell 0.71% by 09:14 GMT.
Smaller producers also trade lower
Mid-sized and independent energy producers also weakened alongside the oil majors. Harbour Energy (LSE:HBR) dropped 1.97%, Serica Energy (LSE:SQZ) lost 1.83%, and Ithaca Energy (LSE:ITH) slipped 1.56%.
Oil rebounds after military action near Strait of Hormuz
Brent crude futures rose 3.4% to $96.59 per barrel after tumbling 6.78% on Monday to close at $93.42.
Meanwhile, U.S. West Texas Intermediate crude traded down 3.64% at $93.08.
The U.S. military said it carried out “self-defence strikes” overnight targeting Iranian missile launch sites and boats allegedly involved in laying mines close to the Strait of Hormuz.
CENTCOM spokesperson Timothy Hawkins told CNN that forces acted “to protect our troops from threats posed by Iranian forces,” while maintaining that the ceasefire agreement remained active. Iranian authorities did not immediately confirm that assessment.
Negotiation hopes mixed with continued diplomatic tensions
The strikes came only hours after Donald Trump said meaningful progress had been achieved in negotiations, posting on Truth Social that Iran’s stockpile of enriched uranium would either be transferred to the United States or destroyed at a mutually agreed location.
Iranian officials provided a more cautious assessment. Foreign Ministry spokesperson Esmaeil Baqaei acknowledged progress on “a large portion of discussion topics” but warned that “frequent changes in the positions of American officials complicate every negotiation,” adding that no immediate agreement could yet be declared.
A senior Iranian delegation led by parliament speaker Mohammad Bagher Ghalibaf and Foreign Minister Seyed Abbas Araghchi travelled to Qatar on Monday for another round of discussions, which a U.S. official reportedly described as encouraging.
Nuclear dispute and sanctions remain major obstacles
According to CNN, disagreements over nuclear language and sanctions relief continue to represent the main barriers to a final agreement.
Washington is reportedly insisting on what officials have described as a “no dust, no dollars” approach, requiring Iran to eliminate nearly 1,000 pounds of highly enriched uranium before any sanctions relief or financial concessions are granted.
The Strait of Hormuz, a vital route handling around one-fifth of global oil supplies, has remained largely shut since the conflict began.
U.S. Secretary of State Marco Rubio said the waterway would reopen “one way or the other,” although he cautioned that reaching a deal could “take a few days.”
Energy sector faces uncertainty over future oil price support
Major oil producers have benefited from elevated crude prices throughout the conflict, supporting earnings across the sector.
However, investors remain aware that any durable peace agreement leading to the reopening of the Strait of Hormuz could quickly remove one of the key drivers behind recent strength in oil markets.
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