The FTSE 100 Middle East conflict escalation dragged London’s benchmark index down 1.4% on Wednesday after the US carried out strikes on nearly 90 targets inside Iran overnight, prompting Donald Trump to declare a ceasefire with Tehran was over.
Brent crude rose 3.5% to $76.45 a barrel as traders priced in disruption to a waterway that carries close to one-fifth of global oil and gas shipments, according to Livemint.
Hormuz closure threat amplifies supply fears
The scale of the US operation was reported by Crypto Briefing, which said Washington also revoked a 60-day sanctions waiver for Iranian oil sales, tightening supply dynamics further.
Iran’s top military command announced the closure of the Strait of Hormuz, warning that any vessel attempting passage would be fired upon, Livemint reported. The US military said commercial ships continued to transit the strait.
Reuters reported that Brent had climbed roughly 4% on the Tuesday session after earlier US strikes in Iran, reversing a sharp drop on renewed hopes for a diplomatic agreement.
‘A surge in oil prices has sparked worries about persistent inflation, with the Middle East tinderbox reigniting. Downbeat sentiment is spreading, with the FTSE 100 sharply lower and European indices deep in the red,’ said Susannah Streeter, Chief Investment Strategist at Wealth Club.
FTSE 100 Middle East selloff hits housebuilders hardest
BP and Shell both rose, lifted by higher crude prices. Consumer-facing names including Kingfisher and Games Workshop were among the index’s laggards.
Housebuilders bore the sharpest losses. Barratt and Redrow sank a combined 4.7% to the foot of the index, with the sector acting as a proxy for inflation concerns throughout the US-Iran conflict.
The sector also absorbed company-specific pressure from Vistry Group, which issued a gloomy trading update and disclosed that chief financial officer Tim Lawlor was leaving. According to a Vistry Group press release dated 8 July 2026, Lawlor will remain with the group until October before taking up a CFO role at another company.
RTT News also reported Lawlor’s planned departure and October transition date.
‘Vistry’s shares fell on a gloomy trading update and news that chief financial officer Tim Lawlor was jumping ship,’ said Dan Coatsworth, head of markets at AJ Bell. ‘Investors have been getting jumpy about the state of the housebuilding and broader construction industry. Raw material and labour cost pressures have haunted the sector of late, and the prospect of possible interest rate hikes is bad news for mortgage affordability and housing sales.’
A downbeat assessment of the broader housing market compounded pressure on the sector. Housebuilders now face a confluence of macro and stock-specific headwinds that will likely keep the group under scrutiny as long as the oil price remains elevated.
The binary question for markets in the sessions ahead is whether Iran’s stated Hormuz closure holds in practice. Any sustained blockage to tanker traffic would pressure Brent significantly higher from current levels, with knock-on effects for UK inflation expectations and rate-sensitive equities.
