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London's FTSE 100 rises as markets recover from war jitters
The FTSE 100 climbed 1.3% at the open as trading began on the London Stock Exchange.
The gains follow a recovery in global markets after comments from Donald Trump raised hopes the US-Israeli conflict with Iran may not become a prolonged war.
Earlier in the day, Asian markets also rebounded, with Japan’s Nikkei closing 2.9% higher after heavy losses on Monday.
South Korea’s Kospi also surged, ending the session up 5.4%
Why is the Strait of Hormuz important?
The Strait of Hormuz is one of the most critical energy chokepoints in the world, connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea.
Around one-fifth of global oil consumption - roughly 20 million barrels a day - passes through the narrow waterway, making it a vital route for energy supplies heading to markets in Asia, Europe and beyond.
The strait is only about 21 miles (34km) wide at its narrowest point, and the shipping lanes used by tankers are far narrower, meaning traffic is tightly concentrated.
Major oil and gas exporters including Saudi Arabia, Iraq, Kuwait, Qatar and the United Arab Emirates rely on the route to transport energy to global markets.
Because so much of the world’s oil moves through the passage, any threat to shipping in the strait can quickly send global energy prices soaring
(Image: Getty)
Asian markets rebounded when war fears eased
Share prices in Asia made gains when concerns about the economic impact of he conflict eased.
Japan's Nikkei 225 was 2.7% higher, while the Hang Seng in Hong Kong was up by 2% and South Korea's Kospi gained by 5.5%
Conflicting remarks
Oil slipped after Trump also said war is "very complete" – before fresh Iran threats have sparked confusion
Brent crude dropped to $91.58 a barrel after Trump said the war in Iran was "very complete, pretty much" in a CBS News interview, easing market fears of prolonged Middle East disruption.
But once markets had closed, Trump struck a different tone, making a series of remarks that suggested the conflict was far from finished. He said: "We have won in many ways. But not enough."
He then escalated tensions further with a direct warning to Tehran over the Strait of Hormuz, one of the world’s most crucial oil shipping routes.
Writing on social media, Trump said: "If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America twenty times harder than they have been hit thus far."
The conflicting messages are likely to keep oil traders on edge, with prices vulnerable to any sign that the war is either winding down or spiralling further
“Total tug-of-war”
Energy markets remain locked in a "total tug-of-war" despite Tuesday's drop in oil prices, according to Alberto Bellorin of investment firm InterCapital Energy.
He said the fall in crude has given traders a brief chance to "exhale", but warned trading will remain highly volatile.
Bellorin added prices could quickly surge again if the conflict escalates, but may fall further if tensions begin to ease
Oil did fall when Trump hinted Iran war could be short
Oil prices had surged to almost $120 a barrel on Monday as fears mounted that the escalating conflict between the US, Israel and Iran could cause prolonged disruption to Middle East supplies.
However, markets pulled back after Donald Trump suggested the military campaign may be short-lived.
Speaking from his Doral resort in Miami, Trump said the operation was intended to eliminate threats quickly:
"We took a little excursion because we felt we had to do that to get rid of some evil.
"And I think you’ll see it’s going to be a short-term excursion."
His comments helped calm markets slightly after the dramatic spike in crude prices earlier in the week.
He added his administration was "looking to keep the oil prices down", as "they went artificially up because of this excursion".
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Brent crude slides as markets react to Iran conflict
In late-morning Asian trading, Brent crude slipped 6.5% to $92.46 (£68.78) a barrel, while Nymex Light Sweet crude declined 7% to $88.15.
Trump warns Iran to not block shipping route
Oil prices fell sharply on Tuesday after US President Donald Trump warned Iran to not block a shipping route crucial to global energy supplies.
Speaking on social media, he said: "If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America Twenty times harder than they have been hit thus far."
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