FTSE 100 edges up 0.03% as oil majors offset Iran jitters

London's FTSE 100 edged up 0.03% to 10,499.88 as gains in BP and Shell offset weakness from renewed US-Iran military strikes that pushed Brent crude above $78 a barrel.

"Oil prices will be volatile over the coming months as the situation in the Middle East remains fragile," said Hamad Hussain, an economist at Capital Economics.

BP climbed 2.5% and Shell added 1.8%, making energy the top-performing sector after the US struck dozens of Iranian military targets overnight in retaliation for attacks on commercial vessels transiting the Strait of Hormuz. Iran responded by targeting US military bases in Jordan, Bahrain and Kuwait, according to statements from both governments. Brent crude traded at USD78.72 a barrel early Monday, up from USD75.86 late Friday, a 3.8% gain that lifted the broader energy complex.

The domestically focused FTSE 250 slipped 0.3% to 23,297.29, reflecting broader caution. Persimmon led the blue-chip index with a 3.4% gain, while Computacenter added 2.3% after Stifel upgraded the stock to buy from hold. GSK rose 0.8% after its phase 2 Azur-1 trial for Jemperli met its primary endpoint in rectal cancer patients.

The pound weakened 0.2% against the dollar to USD1.3391, while gold eased 1% to USD4,059.90 an ounce. The yield on the US 10-year Treasury widened to 4.58% from 4.56%, reflecting inflation concerns tied to higher energy costs.

The Strait of Hormuz, through which about 20% of the world's oil passes, remains the central risk. The US said it used one-way attack sea drones for the first time in its strikes, while Iran signaled it would no longer abide by the memorandum of understanding signed with Washington. Any sustained disruption to tanker traffic through the chokepoint would push crude prices higher and feed through to household energy bills, UK Prime Minister Keir Starmer warned at the NATO summit in Ankara.

This article is for informational purposes only and does not constitute investment advice.