The FTSE 100 index dropped 1.7% or 175.92 points to 10,108.83, extending the previous session’s losses as global markets reacted to disruptions in energy supplies from the Middle East.

The sudden spike in oil prices has intensified concerns over rising inflation, slowing economic growth, and increasing the cost of operations across multiple sectors.

Gainers and Losers

Shell shares rose 1.93% to £3,193.50, while BP gained 1.34% to £505.60, benefiting from the sharp rise in oil prices.  

Brent crude had earlier surged above $115 per barrel during Asian trading hours before stabilizing around $107 per barrel. 

Higher oil prices typically boost revenue expectations for major energy producers. This helped support their share prices.

Among others, Admiral Group gained 0.26% to £3,090, and Tesco advanced 1.11% to £467.

Barclays shares dropped around 3%, while Lloyds Banking Group declined about 2%, reflecting fears that higher energy prices could slow economic growth and increase financial market volatility.

Insurance companies were also impacted by the sell-off, with Prudential and Aviva both falling roughly 2% as investors shifted toward more defensive positions.

On the downside, Spirax Group fell 4.18% to £6,870, while Diploma dropped 3.69% to £5,085 amid the broader market sell-off. 

Mining giant Rio Tinto also declined 3.36% to £6,522, reflecting pressure on commodity-linked stocks.

Games Workshop shares slipped 3.15% to £16,620, while AstraZeneca declined 2.69% to £14,110 and Next fell 2.38% to £12,715.

Global Markets React to Oil Supply Disruptions

The market reaction comes after Brent crude surged over 20% following production cuts by several Middle Eastern producers, including Kuwait. 

Disruptions around the Strait of Hormuz, one of the world’s most important oil transit routes, have raised concerns about global energy supply and inflation.

In Asia, Japan’s Nikkei 225 fell more than 5%, while South Korea’s Kospi index dropped around 6%, reflecting the widespread impact of the energy shock.

Energy Security Concerns in the UK

The surge in oil prices has also raised concerns about energy security in the United Kingdom. 

Data from transmission operator National Gas shows the country currently holds about 6,700 gigawatt hours (GWh) of gas in storage, which is equivalent to roughly one and a half days of winter demand. 

Although officials say these levels are typical for this time of year, analysts warn that the UK’s limited storage capacity leaves it vulnerable to sudden supply disruptions or price spikes.

Also Read: Stock Market Today: Sensex at 77,083, Nifty Down 576 Points as Oil Shock Sends Auto Stocks Down 5%

G7 Considers Emergency Oil Reserve Release

To help stabilize markets, G7 finance ministers are preparing to hold an emergency meeting to discuss a coordinated release of oil from strategic reserves.

Reports indicate that members of the International Energy Agency may consider releasing 25-30% of the group’s combined reserves, which total approximately 1.2 billion barrels, in an attempt to ease supply concerns and calm markets.

Nigel Farage Invests in Bitcoin Treasury Business 

Nigel Farage has invested in an Aquis-listed Bitcoin treasury business as the Reform leader doubles down on his commitment to cryptocurrencies. 

Farage acquired 6.3% at £215,000 in Stack BTC, a small-cap company which says it is “focused on building a portfolio of high-quality, cash-generative businesses alongside a Bitcoin treasury,” according to stock market filings published on Monday. 

Former Chancellor Kwasi Kwarteng is executive chairman of the business and controls a 5.4% stake worth £185,000.