Brent crude fell 9% to below $88 a barrel Monday after the United States announced a pause in military strikes on Iran, triggering a broad retreat in oil prices as traders priced out the risk of a supply shock through the Strait of Hormuz.
The move sent UK gilt yields lower alongside crude, as markets shifted away from the war-premium bets that had pushed energy prices sharply higher in recent sessions.
BP and Shell both fell on the FTSE 100, tracking the crude benchmark down. The two companies had been among the index’s biggest gainers during the spike.
The Strait of Hormuz carries roughly a fifth of the world’s oil supply. Any sustained disruption there would tighten global markets far beyond the levels reached in Monday’s pre-pause trading.
The pause does not constitute a ceasefire or a diplomatic agreement, and analysts cautioned that prices could reverse sharply if hostilities resume.
US and Iranian officials are expected to hold indirect talks later this week, with a further market read expected once the outcome of those discussions becomes clear.