The FTSE 100 oil majors BP and Shell kept the UK blue-chip index afloat on Tuesday after the expiry of the 60-day US-Iran peace deadline sent Brent crude to $91.45 a barrel, lifting energy stocks but dragging rate-sensitive sectors lower.
The index closed up just 6 points, masking a sharp divergence beneath the surface: BP gained 1.8% and Shell rose 1.2%, while housebuilders Persimmon and Barratt Redrow each fell close to 2%.
Iran deal collapse sets the terms for oil markets
The session’s direction was set by the collapse of a diplomatic process that began in June. The US and Iran had signed a 14-point Memorandum of Understanding committing both sides to negotiate a final deal within 60 days, according to CNN, which published the MoU text. The agreement also required Iran to allow commercial vessels to transit the Strait of Hormuz without charge for that period.
The deadline expired with no extension and no deal. AP News reported that both sides appeared as far apart at the close of the period as they had been at its start. PBS NewsHour reported that Iranian officials had effectively stopped direct negotiations in June, with messages relayed through intermediaries.
President Trump declared the pact ‘over’ on 7 July, according to Fox News, with Tehran later describing it as suspended. Treasury Secretary Scott Bessent described the post-deadline phase as an ‘unprecedented new phase of economic pressure’ against Iran.
The Strait of Hormuz sits at the centre of the supply anxiety. Roughly one-fifth of the world’s oil and liquefied natural gas transits the waterway, Fox News reported, and crude supply losses from halted marine traffic there since the war began in February had already driven Brent to its highest level since March 2022 in the week before Tuesday’s session, according to Reuters.
FTSE 100 oil majors caught between inflation risk and supply premium
‘The latest oil price movements are both a pain and a gain for UK investors,’ said Dan Coatsworth, head of markets at AJ Bell. ‘Brent crude edged higher, hitting $91.45 a barrel in early trading as tensions intensified in the Middle East. That’s bad for businesses and consumers, but good for the FTSE 100’s oil heavyweights BP and Shell who propped up the UK blue-chip index amid a broader European market pullback.’
Coatsworth added: ‘Efforts to bring an end to the war have not been successful, and reports suggest Iran will now become more aggressive. That raises the risk of further disruption to oil supplies out of the Middle East, hence why inflation fears and potential interest rate hikes are front of mind for investors. This scenario is negative for equities as it can dampen risk appetite.’
That risk-off tone was visible across the index. BT was the session’s top riser, gaining 2.2%, a sign that defensives attracted buyers. Miners Antofagasta, Fresnillo and Endeavour Mining all fell, reversing the previous day’s gains. US futures pointed to a lower open, and US tech-focused investment trusts were among the hardest hit.
The US Energy Information Administration’s September 2026 Short-Term Energy Outlook forecast Brent averaging around $90 a barrel across the second half of 2026, with August already averaging $91 a barrel, $7 higher than July. Global oil inventories had fallen by an estimated 400 million barrels so far in 2026, the EIA said, underpinning prices.
Reuters reported that energy analysts note a six-to-eight-week lag between credible improvements in access conditions through the Strait and any real normalisation of oil flows, a structural feature of shipping markets that limits how quickly a diplomatic breakthrough could ease supply pressure.
Wednesday brought a sharp reversal: Brent settled at $101.27 a barrel, down $8.60 or 7.83% on the session, as Reuters reported optimism grew about a possible US-Iran peace agreement. Earlier in that session, Brent had dropped below $100 for the first time since 22 April.
The MoU had also included a US commitment to develop a reconstruction and economic development plan for Iran worth at least $300 billion, with the implementation mechanism to be finalised within the 60-day window, according to Al Jazeera. With that framework now in question, the next diplomatic signal from Washington or Tehran will determine whether Tuesday’s oil premium holds or Wednesday’s reversal proves the more durable move.
