FTSE 100 rises as oil hits $83 on Strait of Hormuz flare-up

The FTSE 100 opened higher on Friday even as fresh hostilities in the Strait of Hormuz pushed Brent crude above $83 a barrel, reversing the pullback seen earlier in the week. Iran said it had struck "hostile targets" in the waterway after explosions were reported near Qeshm Island, injecting fresh uncertainty into a chokepoint that carries roughly a fifth of global oil supply.

The incident came just as Iran and Oman announced broad terms for a new transit arrangement. Under the proposal, inbound vessels would sail closer to the Iranian coast while outbound traffic would use a lane nearer to Oman. Tehran has signalled it intends to bar US and Israeli ships entirely and to demand compensation from countries it deems hostile before granting passage.

Iran's foreign ministry spokesman Esmaeil Baqaei poured cold water on the Omani-brokered framework, saying it would not guarantee safe navigation while a US blockade of Iranian ports persists. His remarks contradict White House rhetoric that suggests American diplomats are actively advancing talks. President Donald Trump reiterated on Thursday that the US is "knocking the hell out of" Iran but added he would "rather make a deal, because I don't want to kill people."

Diplomatic signals diverge

The mixed messaging leaves shipping insurers and energy traders parsing every statement for clues. A durable arrangement would require not only Omani mediation but also tacit US acceptance, something Tehran insists has not been offered. Until that gap narrows, the risk premium embedded in oil prices is likely to persist.

Market implications

For UK equities, the higher oil price is a double-edged sword. Energy majors such as BP and Shell benefit from stronger crude, supporting the index, while sectors sensitive to fuel costs and inflation, airlines, logistics, consumer discretionary, face headwinds. The FTSE 100's early gains suggest investors are, for now, weighting the energy boost more heavily than the geopolitical risk.

Meanwhile, separate data showed UK national debt passing £3 trillion as interest costs overtook the defence budget, underscoring the fiscal constraints facing the next government.