Oil jumps to $83 as Strait of Hormuz tensions rattle markets

European stocks slipped into negative territory on Friday after a flare-up in the Strait of Hormuz sent oil prices surging, wiping out gains from earlier hopes of a diplomatic thaw between Washington and Tehran. Brent crude, the international benchmark, climbed to $83 a barrel in morning trade after Iran said it had struck "hostile targets" in the waterway following explosions reported near Qeshm Island.

The violence came just as Iran and Oman announced broad terms for a new transit arrangement intended to calm the strait, through which roughly a fifth of the world's oil passes. Under the proposal, inbound vessels would sail a lane closer to the Iranian coast while outbound traffic would use a corridor nearer to Oman. Yet Tehran simultaneously signalled it would bar US and Israeli ships from the passage altogether and demand compensation from countries it deems hostile before granting them access.

Iran's foreign ministry spokesman Esmaeil Baqaei poured cold water on the Oman-brokered framework, saying it would not guarantee safe navigation while a US blockade of Iranian ports persists. His remarks contradicted suggestions from the White House that American officials were involved in advancing the talks. President Trump maintained his pressure campaign, telling reporters the US was "knocking the hell out of" Iran but adding he would "rather make a deal, because I don't want to kill people."

"The development came as Iran and Oman brokered an agreement on broad terms to open up the Strait of Hormuz."

Market reaction

The FTSE 100 erased early gains, with energy majors providing only a partial hedge against broader selling pressure. Travel and logistics stocks came under particular strain as insurers reassessed war-risk premiums for Gulf transits. Analysts said the $83 level on Brent could hold if the Oman corridor holds, but any further Iranian interdiction of commercial shipping would likely push prices toward the mid-$80s.

Diplomatic cross-currents

The mixed signals from Tehran, offering a transit deal with one hand while threatening exclusionary rules with the other, reflect an internal debate over how far to engage with the US while preserving leverage. Oman, a traditional mediator, has yet to publish the full text of the arrangement, leaving shipowners uncertain about the practical rules of the road. Until clarity emerges, tanker operators are expected to keep scheduling flexible and maintain higher freight rates.

Meanwhile, corporate dealmaking continued elsewhere. Apollo Global Management sealed a £5.7 billion takeover of easyJet after rival bidder Castlelake withdrew, a transaction that underscores private equity's appetite for European aviation assets despite the geopolitical backdrop. Read the full story on the easyJet deal.