Oil Pulls Back After Hitting Five-Month High on Iran Strikes

Oil prices rose nearly 2% on Monday after earlier touching five-month highs, following US airstrikes on Iranian nuclear facilities and threats from Tehran to close the Strait of Hormuz. Wall Street futures fell 0.3%, while European futures slipped 0.4%, and the dollar edged higher against the euro and yen as markets braced for potential supply disruptions. Fed Chair Jerome Powell will testify before Congress this week amid speculation over a July rate cut and ongoing inflation risks from tariffs and higher energy costs.

Equities

The FTSE 100 fell 0.2% on Friday, ending a five-week run of gains and closing at its lowest in more than two weeks. For the week, the index dropped 0.8% as investors reacted to Middle East tensions and central bank interest rate decisions. Drugmakers were among the biggest drags, with GSK down 2.3% and AstraZeneca falling 1.5%. Shares in BP dropped 2.1% as oil prices slipped on hopes that the US might seek a diplomatic route in the Iran-Israel conflict following new sanctions on Tehran.

Housebuilder Berkeley fell sharply, losing 8.2% after issuing downbeat forecasts for fiscal 2026 and 2027. The company also proposed a leadership change, with CEO Rob Perrins set to become executive chair. Metro Bank rose 4% after reports that its largest shareholder is considering selling his majority stake, raising expectations of a shake-up in ownership.

Across the Atlantic, the S&P 500 slipped 0.2% on Friday and ended the week 0.2% lower. The Nasdaq fell 0.5% on the day but still managed a 0.2% gain for the week. The Dow Jones rose 0.1% on Friday and was broadly unchanged over the week. Trading volume was high due to a “triple-witching” event involving the expiration of various derivatives contracts.

Nvidia was one of the main drags on both the S&P 500 and Nasdaq, weighing on tech-heavy indices after several megacap stocks fell. Accenture shares dropped 6.9% after the company reported a decline in new bookings in the third quarter, raising concerns about future demand for IT services.

Kroger climbed 9.8% after the US grocery chain raised its full-year sales forecast. Management pointed to strong consumer demand and improved performance across its store network.

Forex & Commodities

The US dollar strengthened on Monday following American strikes on Iranian nuclear sites, with investors favouring safer assets. The dollar index rose 0.3% to 99.037. Sterling slipped 0.26% to $1.3416, while the euro fell 0.33% to $1.1484. The Australian dollar dropped 0.67% to $0.6408 and the New Zealand dollar declined 0.68% to $0.5926. The yen weakened against the dollar, which rose 0.52% to 146.81, touching a one-month high. Bank of America analysts said further gains in USD/JPY were possible, citing Japan’s heavy reliance on Middle Eastern oil imports.

Gold prices edged lower despite rising geopolitical tensions. Spot gold was down 0.4% at $3,354.03 an ounce, with US gold futures falling 0.5% to $3,369.10. Silver was little changed at $36.02 per ounce, platinum held at $1,264.96, and palladium gained 0.6% to $1,050.07.

Oil prices rose sharply after the weekend strikes, amid concerns about a potential Iranian response. Brent crude was up $1.52 or 1.97% at $78.53 a barrel, while US WTI crude gained $1.51 or 2.04% to $75.35. Both contracts had risen over 3% earlier in the session, reaching five-month highs. Goldman Sachs warned that if oil flows through the Strait of Hormuz were halved for a month, Brent could temporarily spike to $110 per barrel. Brent has gained 13% and WTI 10% since 13 June.