The FTSE 100 closed lower on Thursday as oil prices climbed above $100 a barrel for the first time since May, with investors moving cautiously after renewed attacks in the Red Sea heightened fears of a wider conflict across the Middle East.
The blue-chip index ended the session 0.7% lower, while the FTSE 250 dropped 1.3% as rising energy prices and geopolitical uncertainty weighed on market sentiment.
Brent crude settled at $100.98 a barrel, up sharply from $93.74 the previous day, after Yemen’s Iran-backed Houthi rebels attacked two Saudi oil tankers in the Red Sea.
The latest escalation prompted US President Donald Trump to warn that Iran would be held responsible for further attacks by the Houthis, threatening “major military punishment” against both Iran and the rebel group should shipping continue to be targeted.
Higher crude prices lifted oil producers, with BP gaining 3.1% and Shell advancing 1.6%, making them among the strongest performers on the FTSE 100.
Property company Segro also stood out, rising 6.5% after confirming it is prepared to recommend Prologis’ final takeover proposal.
The revised offer values Segro at around £14.0 billion, or 1,031.7p per share, through an exchange of 0.0920 new Prologis shares for each existing share, alongside a partial cash alternative worth up to £3.5 billion, representing a quarter of the total consideration.
Despite gains in energy and property stocks, losses elsewhere left the wider market firmly in negative territory.
Centrica recorded the steepest decline on the FTSE 100, falling 10% after reporting lower first-half operating profit and issuing cautious guidance for its energy trading business.
The British Gas owner posted a pre-tax profit of £672 million for the six months to the end of June, compared with a loss a year earlier, although adjusted operating profit slipped 9.5% to £497 million and earnings fell short of market expectations. The company also warned that outcomes for Centrica Energy in 2027 remain uncertain, with expected earnings below current analyst forecasts.
On the FTSE 250, veterinary services provider CVS Group dropped 6.0% despite reporting higher annual revenue. The company said consumer confidence in the UK remains subdued, affecting customer visits to companion animal practices, although it maintained a positive outlook as its Australian expansion continues and regulatory uncertainty begins to ease.
Mitchells & Butlers lost 5.1% after reporting flat third-quarter sales, with the pub and restaurant operator saying prolonged periods of extreme heat reduced demand at its food-led venues. While drink sales increased during the quarter, weaker food sales and the timing of Easter compared with last year weighed on overall trading.
Among smaller companies, Mission Group surged 24% after forecasting a 27% increase in first-half headline pre-tax profit. Although revenue is expected to decline, the marketing and communications group said it enters the second half with a strong pipeline of new business, supported by expansion in the United States.
European markets also came under pressure, with both Paris’ CAC 40 and Frankfurt’s DAX 40 falling 1.6%.
Wall Street extended the cautious mood as concerns over artificial intelligence spending, rising Treasury yields and higher oil prices triggered broad selling.
The Nasdaq Composite fell more than 2%, while the S&P 500 lost 1.2% and the Dow Jones Industrial Average declined 0.9%, despite stronger-than-expected US labour market data showing new jobless claims fell to their lowest level in weeks.