Oil has retreated to below $100 a barrel while stocks rise as Iran suggested it was open to striking a deal with the US, despite the collapse in talks over the weekend.
Even as the US began its blockade of the Strait of Hormuz, a wave of relief spread across markets as Donald Trump said Iranian negotiators were keen to strike a deal.
Iranian President Masoud Pezeshkian said the country was open to talks but only within the framework of ‘international law’.
Brent crude dipped below $100 per barrel to around $98, with Asian stocks up overnight and the S&P 500 closing above its pre-war level.
But the US is still playing hardball, going ahead with its blockade of the Strait of Hormuz, which came into effect on Monday afternoon (London time). Trump said the US would block Iranian vessels and any ships that paid tolls.
Vice President JD Vance said the US had shown ‘two can play at that game… If the Iranians are going to try to engage in economic terrorism… no Iranian ships are getting out, either.’
Elsewhere today, Rachel Reeves will visit Washington DC for an International Monetary Fund (IMF) summit. Growth forecasts for the UK are expected to be slashed as higher energy prices take their toll, raising the risk of stagflation and recession.
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FTSE 100 opens higher
The FTSE 100 opens 23 points higher at 10,597, regaining all of Monday’s losses amid renewed optimism of an end to the conflict.
London’s blue-chips have had a more muted reaction than Asian markets overnight. That might have something to do with brent creeping higher to $99.
Retailers boosted by early Easter
Retail sales in March rose by 3.6 per cent year-on-year, up from 1.1 per cent in February, boosted by an early Easter.
Figures from the British Retail Consortium (BRC) show food sales rose by 6.8 per cent, ahead of the 12-month average of 4.3 per cent, while non-food increased 0.9 per cent, below the average 1.1 per cent.
BRC chief Helen Dickinson said: ‘An early Easter provided a much-needed boost to food sales as families came together over the long weekend.
‘The disruption to international travel caused by the Middle East conflict also hit sales of travel-related goods.’
Analysts warn that sales growth is likely to slow in April and the rest of the year, though.
‘It is early days in the latest energy prick shock, and we think the bigger picture will be of slower consumers’ spending growth for the remainder of 2026 as inflation creeps up and disposable incomes are hit,’ says Pantheon Macroeconomics.
BP flags ‘exceptional’ quarter on higher oil prices
BP reported an ‘exceptional’ first quarter after the Middle East conflict sent brent crude prices soaring.
In a trading update, the oil giant said its oil trading was expected to return ‘exceptional’ results compared with a ‘weak’ previous quarter.
The price of brent has risen from below $60 a barrel at the start of 2026 to around $98 this morning, having hit as high as $118 amid the conflict.
BP said oil and gas production was broadly flat, while results in its gas trading division had been average.