Oil prices increased significantly while European stock markets declined on Monday, following the US capture of an Iranian ship that reduced expectations for a peace agreement. The global oil benchmark, Brent crude, climbed 5% to approximately $95 per barrel. In Europe, major indices dropped: the UK’s FTSE 100 decreased by 0.6%, France’s Cac 40 and Germany’s Dax each fell about 1%, and the Stoxx Europe 600, monitoring leading continental firms, slipped 0.8%. These shifts came after Donald Trump’s Sunday statement that US forces had taken control of an Iranian cargo vessel attempting to bypass a blockade near the Strait of Hormuz. In a social media post, he noted: ‘We have full custody of their ship, and are seeing what’s on board!’ This event heightened concerns that the truce might collapse ahead of planned talks in Pakistan. The ongoing conflict with Iran, now in its eighth week, has resulted in thousands of deaths and disrupted worldwide energy supplies. Typically, around one-fifth of global oil and gas transits the Strait of Hormuz. Shares in aviation companies also dropped sharply due to worries about travel disruptions and potential shortages of jet fuel. International Airlines Group, parent of British Airways, declined 2%; Wizz Air fell 5%; Ryanair, the continent’s largest carrier, dropped 3%; and aircraft engine maker Rolls-Royce decreased 3.7%. On the FTSE 100, energy firms BP and Shell saw gains exceeding 2%. Oil prices had previously fallen 9% on Friday after Iran announced it would reopen the strait during a two-week truce, and Trump stated Tehran had committed to keeping the route open permanently. However, weekend reports indicated Iran’s Revolutionary Guards had targeted commercial ships. Tehran has refused to join further discussions the US aimed to begin before the truce ends Wednesday. Vessel traffic through the strait has nearly halted, with just three passages in 12 hours based on SynMax satellite data and Kpler tracking. Among them, the sanctioned oil tanker Nero, penalized by Britain for Russian oil dealings, exited the Gulf via the strait. A chemical tanker and a liquefied petroleum gas carrier entered the Gulf; the latter faced US sanctions for Iranian trade. Susannah Streeter, lead investment strategist at broker Wealth Club, stated that expectations for renewed trade, particularly energy flows, have faded, leading to renewed market anxiety. She added: ‘Deep reserves of patience are needed, but with some industries such as airlines staring at jet fuel shortages, these are tense times.’ Concerns are mounting about the energy crisis in the UK, where wholesale gas prices rose 2.6% to 99.6p per therm on Monday. Experts from the Energy and Climate Intelligence Unit project that a steady $100 per barrel oil price could add £140 annually to fuel expenses for UK drivers covering 8,000 miles. The British Oil Security Syndicate, an industry group, reported to the Sun a 19% rise in unpaid fuel incidents at UK stations since the US-Israel conflict with Iran began. There are also worries that the blockade might cause shortages of fertilizers, a key commodity usually shipped through the strait, posing risks to worldwide food supplies. Chicago wheat futures increased 1.3% to $6.07-1/4 per bushel on Monday, following a 5% gain last week.
