Oil Slides and the FTSE Rallies as the Iran Truce Holds
Oil fell sharply and London shares were set to rally as the pause in the US–Iran war took hold, unwinding the war-risk premium that had driven crude towards $100. Brent dropped around 5 per cent to roughly $91 a barrel, and the pound firmed above $1.33. The retreat eases the inflationary threat that had loomed over the Bank of England ahead of its rate decision on Thursday.
The FTSE 100, which closed on Friday near 10,736, was expected to open higher, while gilt yields slipped to around 5 per cent as fears of an oil-driven inflation spike receded. The Bank of England is still widely expected to hold Bank Rate on Thursday, but the fall in crude strengthens the case against a rise and offers relief to mortgage-holders. Much depends on whether the Gulf truce endures: a collapse could send oil surging again within days. Watch the London open, the oil price and the Bank’s guidance on Thursday.