London shares fell sharply at the open as a renewed surge in oil and gas prices triggered a broader risk-off move across global markets.
The FTSE 100 dropped 1.1% to 10,195.20, while the FTSE 250 declined 1.2% to 21,826.69, reflecting growing investor caution.
The sell-off follows a spike in energy prices driven by escalating attacks on infrastructure in the Middle East. Oil has surged above $110 a barrel, while disruption to key gas facilities has intensified fears over supply shortages and pushed volatility higher.
Investors are increasingly concerned that persistently elevated energy prices could keep inflation under pressure, forcing central banks to maintain higher interest rates for longer — a backdrop that typically weighs on growth and equity valuations.
Gas prices surge at fastest pace since early days of conflict
Gas prices have spiked at their fastest rate since the opening days of the Middle East war, highlighting renewed volatility in energy markets.
European gas prices jumped 35% shortly after the market open, marking the sharpest intraday rise since the immediate aftermath of the initial US and Israeli strikes.
In those first sessions, prices surged by 54% and 48%, before settling with gains of 39% and 22%, underlining how sensitive markets remain to geopolitical developments.
Oil climbs towards $115 as tensions escalate
Oil prices have also continued to rally, building on their strongest close in years after fresh threats from US President Donald Trump.
Brent crude closed overnight at $107.38 a barrel, its highest level since July 2022, and then rose a further 7% on Thursday to nearly $115.
The gains follow escalating tensions after Iranian missile strikes on Ras Laffan, the world’s largest LNG export facility, and warnings from Trump that the US could “massively blow up” Iran’s South Pars gas field.
Trump later said Washington had no prior knowledge of Israel’s earlier strike on South Pars and suggested further attacks could be avoided if Iran halted its own actions.
Despite those remarks, analysts say markets remain highly sensitive to developments.
Jim Reid of Deutsche Bank said oil markets are still “on edge,” with growing concern that further damage to energy infrastructure could significantly disrupt global supply.
