Closing post
With Europe’s stock markets closed, it’s time to wrap up… A quick recap:
Oil and gas prices fell sharply on Friday after Iran said the strait of Hormuz would open to commercial shipping, potentially clearing the way for tankers holding millions of barrels of oil and gas to reach the global market.
Iran’s foreign minister said vessels would be free to transit the strait of Hormuz for the duration of the 10-day ceasefire between Israel and Lebanon, struck on Thursday.
Brent crude, the international benchmark, fell 12% to $87 a barrel. That is well below a high of $119 last month, but still higher than the $72 a barrel before the war.
Donald Trump later said the US naval blockade on Iran’s use of the strait would remain in full force until Washington had struck a deal with Tehran. He said the process “should go very quickly” because “most of the points are already negotiated”.
The benchmark European gas contract fell by about 8.5% to €38.80 (£33.80) per megawatt hour on hopes that diplomatic progress between the US and Iran could bring an end to the conflict.
Here’s the full story:
Our Middle East liveblog will be tracking all the latest developments
European stock markets have closed with solid gains.
Germany’s DAX led the way, up 2.25%, followed by Spain’s IBEX which gained 2.2% and France’s CAC 40 which rose by almost 2%.
UK borrowers could soon benefit from the reopening of the strait of Hormuz, given today’s market reaction.
Adam French, head of consumer finance at Moneyfactscompare.co.uk, explains:
“Markets have welcomed the reported reopening of the Strait of Hormuz, with two- and five-year swap rates falling back below 4% for the first time in a month. This strengthens the view that mortgage pricing may have peaked, particularly as we’ve seen the first week-on-week fall in average fixed mortgage rates since just before the conflict began. However, recent volatility shows how quickly pricing can shift again.
“For borrowers, this should begin to feed through into mortgage rates with more lenders moving towards selective cuts on fixed deals in the coming days and weeks. That said, many lenders will want to see a sustained downward trend in funding costs before passing on more meaningful reductions, especially while the peace process remains fragile.”
Shipping operators cautiously welcome Iran's move
Shipping companies have cautiously welcomed Iran’s announcement that the strait of Hormuz is open but said they would require clarifications before vessels move through the entry point to the Gulf.
Arsenio Dominguez, secretary-general of UN shipping agency the International Maritime Organization (IMO), says:
“We are currently verifying the recent announcement related to the reopening of the Strait of Hormuz, in terms of its compliance with freedom of navigation for all merchant vessels and secure passage.”
The International Chamber of Shipping is also cautiously positive.
ICS Secretary General Thomas A. Kazakos said it is “imperative that full freedom of navigation is respected by all parties in accordance with international law”.
Kazakos explains:
This development offers a cautious measure of reassurance to the global maritime community and, most importantly, to the seafarers who have been placed in harm’s way and confined on board their vessels for more than seven weeks.
While this announcement is a positive step there is still much uncertainty around what it means in practice. Regardless it is essential that it marks the beginning of a broader and more durable return, beyond the current ceasefire, to freedom of navigation in one of the world’s most critical maritime corridors.
An orderly and sustained return to normal transit through the Strait will be essential. This will require close coordination between the International Maritime Organization, regional states, naval authorities, and the shipping industry to ensure that vessels can transit safely.
Updated
President Donald Trump has now told Reuters that the US will enter Iran at a “leisurely pace” to recover its enriched uranium and bring it back to the US.
US stock market up 2%
Donald Trump has now claimed that the strait of Hormuz will not be closed by Iran again, posting:
Iran has agreed to never close the Strait of Hormuz again. It will no longer be used as a weapon against the World! President DONALD J. TRUMP.
The US market is bouncing higher, with the Dow Jones industrial average up 2%, or 965 points, at 49,543 points.
Updated
London stock market closes higher
The UK’s FTSE 100 has closed at its highest level since early in the Iran war.
The blue-chip share index has ended the day 0.7% higher, up 77 points at 10,667.
That’s its highest close since 2 March, despite being dragged back by oil companies and electricity producers.
Precious metals miner Fresnillo ended the day as the top riser, up 6.5%, followed by airline group IAG (+6.2%) and copper miner Antofagasta (+5.3%).
The smaller FTSE 250 index posted a stronger rally – up almost 1.9%.
The process of returning to normal in the strait of Hormuz will probably take some times, explains Paul Diggle, chief economist at Aberdeen Investments:
“Further progress is being made in the US-Iran ceasefire, with announcements today about the strait of Hormuz re-opening.
That said, the normalisation of traffic is likely to be gradual, with plenty of uncertainties around maritime safety and whether Iran needs to give permission to individual ships, seemingly remaining.
So our economic forecasts incorporate a slight worsening in the global growth-inflation trade-off this year, relative to the pre-war outlook.
Updated
UK government bond prices are rallying as investors welcome the reopening of the strait of Hormuz.
This is pushing down the yield, or interest rate, on the debt.
Ten-year bond yields are down 9 basis points (0.09 of a percentage point) at 4.75%, while shorter-dated two-year bond yields are down 11bps at 4.1%.
That indicates that the cost of government borrowing has come down, as the City’s fears of an inflation surge from the Iran war ease.
"A huge sigh of relief to global markets"
The London stock mrket is higher too – with the FTSE 100 up 66 point, or 0.6%, at 10,655 points.
Axel Rudolph, chief technical analyst at IG:
“The reopening of the Strait of Hormuz, even on a temporary basis, has come as a huge sigh of relief to global markets, easing immediate fears around energy supply disruption with the oil price instantly dropping more than 10% and providing a degree of stability to shipping routes.
However, the conditional nature of the move, tied to the duration of the Lebanon ceasefire, means this is far from a permanent resolution. Investors will remain wary of how quickly tensions could resurface, and for now this looks more like a pause in volatility rather than a definitive turning point.”
Expectations that the Bank of England might raise interest rates more than once this year are fading.
The money markets are now only indicating around 23 basis points of increases to Bank rate by the end of this year, meaning one quarter-point rate rise is no longer fully priced in.
Earlier this week, the markets were indicating around 35bps of rises – meaning one rise was fully priced in, with the possibility of a second.
European stock markets are ripping higher.
Germany’s DAX and France’s CAC 40 have both jumped by around 2%.
Neil Wilson, Saxo UK investor strategist says the markets have received “a massive shot in the arm for risk sentiment”:
Iran says the Strait of Hormuz is open to all commercial shipping during the Israel-Lebanon ceasefire...a good chance for fomoop (fear of missing out on peace) trades to ratchet up into the weekend, though watch for what the US says and consider even if Iran says it’s open, how many will get through?
Also, risk remains for shooting to start again...nevertheless as I said before it’s less about the actual route being taken and all the various stops on the way, and more about the direction of travel - so markets are happy to roll on with this latest development being viewed as a considerable easing of tensions. Rotation is in play again - now watch airlines/travel/luxury for the pickup.
A senior Iranian official has told Reuters that transit through the strait of Hormuz will be through ‘designated safe lanes’ which Iran deems safe for maritime navigation.
UK gas prices down
UK gas prices have slumped too, on hopes of a pick-up in deliveries from the Gulf now Iran has announced the strait of Hormuz is open.
The month-ahead UK gas contract is down almost 8% at 98p per therm.
That’s still higher than before the conflict began, when it was below 80p a therm. But it’s also rather lower than the highs of 180p seen in March.
Updated
US stock market jumps at the open
Wall Street has hailed Iran’s announcement that the strait of Hormuz is fully open.
Stocks have opened higher in New York, with the Dow Jones industrial average jumping by 578 points, or 1.2%, to 49,157 points.
The broader S&P 500 index is up 0.7%.
Trump: the naval blockade remains in full force
The US is not, yet, lifting its own blockade on Iranian ports.
Donald Trump has posted on Truth Social that it will remain in place until a peace deal (or ‘transaction’, as he calls it) is complete.
The US president says:
THE STRAIT OF HORMUZ IS COMPLETELY OPEN AND READY FOR BUSINESS AND FULL PASSAGE, BUT THE NAVAL BLOCKADE WILL REMAIN IN FULL FORCE AND EFFECT AS IT PERTAINS TO IRAN, ONLY, UNTIL SUCH TIME AS OUR TRANSACTION WITH IRAN IS 100% COMPLETE. THIS PROCESS SHOULD GO VERY QUICKLY IN THAT MOST OF THE POINTS ARE ALREADY NEGOTIATED. THANK YOU FOR YOUR ATTENTION TO THIS MATTER! PRESIDENT DONALD J.TRUMP
Oil company shares are slumping, as the reopening of the strait of Hormuz threatens to end their earnings boost from the war.
BP (-6.7%) and Shell (-5%) are among the top fallers in London.
Airline shares jump
Shares in airlines are soaring after Iran announced the strait of Hormuz was ‘completely open’.
IAG, the parent company of British Airways, has jumped 6%, to the top of the FTSE 100 leaderboard.
Rolls-Royce, which makes and services jet engines, are up 5.5%.
Among smaller stocks, Wizz Air are up 10% and easyJet has jumped by 8.2%.
Oil tumbles 10% as Iran declares strait of Hormuz 'completely open'
The oil price is tumbling, after Iran announced that the strait of Hormuz is now open.
Crude oil has plunged by 10% on hopes that energy supplies could resume after weeks of disruption.
Iran’s foreign minister, Abbas Araghchi, posted on social media that the waterway is ‘completely open’, following the ceasefire agreed between Israel and Lebanon overnight.
In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire.
Araghchi added that vessels must travel on the “coordinated route” previously announced by Iran’s Ports and Maritime Organisation.
Brent crude has plunged below $90 a barrel, a 10% fall.
Although that account, on X, isn’t verified, president Trump has also announced that Iran has reopened the strait.
Posting on Truth Social, he says:
IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE. THANK YOU!
Optimism was already building in the markets after Axios reported that the US. and Iran are negotiating over “a three-page plan to end the war”.
One element under discussion being that the U.S. would release $20bn in frozen Iranian funds in return for Iran giving up its stockpile of enriched uranium, Axios reported.
Updated
With rather awkward timing, the Bank of England’s chief economist has criticised calls for the central bank to “wait and see” how the Iran war pans out before changing policy.
Huw Pill told a roundtable event hosted by Barclays:
“If you’re waiting and seeing and you don’t see, then you’ve just waited.”
“And I’m not sure waiting is necessarily the appropriate response to the sort of inflationary dynamics which have the potential, at least, to have some self-sustaining momentum.”
Pill is one of the more hawkish members of the Bank’s monetary policy committee, who voted against an interest rate cut in February.
IMF: UK can't afford another debt-fuelled energy support package
The IMF has warned the UK faces a “fiscal problem” amid the economic shock from the Iran war.
Helge Berger, an assistant director of the Washington-based fund, said the sharp rise in UK government bond yields since the outbreak of the war reflected investor fears over higher levels of borrowing.
He said:
“There is a reflection of an underlying fiscal problem that I know the government is looking to address through its multiyear consolidation strategy”.
Speaking at the Washington-based fund’s press conference on the regional economic outlook for Europe, he warned the IMF believed the UK “does not have the fiscal space” to announce a package of household energy support using higher levels of borrowing.
“Our advice for the UK is broadly aligned with what we’ve been telling many countries: it’s important to keep the course on fiscal consolidation.
“The country has been making tough choices. It’s weighing the benefits of costs of acting on the revenue side… It’s also looking at spending. That is what countries have to do. The balance is a function of political discussions and societal consensus.”
Berger said the government would therefore need to focus on “temporary, targeted and timely” energy support for the most vulnerable households to help limit the cost of any package.
“Let’s make sure we hold the course of fiscal consolidation, not to make sovereign debt markets nervous.”
Updated
IMF: Bank of England should leave interest rates on hold this year
The International Monetary Fund is urging the Bank of England to leave interest rates on hold this year.
Alfred Kammer, director of the IMF’s European Department, has just told the media in Washington DC that the BoE should maintain “a restrictive monetary policy stance”.
Speaking at the IMF and World Bank spring meeting, he adds:
That means keeping the policy rate unchanged for the remainder of the year, Ie, to not go forward with the expected cuts.
Before the Iran war, City investors had expected the Bank to cut rates this year. Now, though, at least one rate rise is priced in by the money markets. Bank rate is currently 3.75%.
BoE governor Andrew Bailey said earlier this week the Bank would not “rush to judgments” about how to respond to an inflation shock fuelled by higher energy prices (which the Bank can’t affect through changing interest rates).
Kammer argues that the European Central Bank should maintain “a neutral monetary policy stance”.
That, he says, means two quarter-point interest rates increases in 2026, which it might be able to reverse in 2027.
Kammer adds:
Of course, there is uncertainty on this and we need to adjust over the next few months what scenario we are in.
Updated
IMF: We were going to upgrade Europe's growth forecast, before Iran war
The Iran war has crushed hopes that European growth would pick up this year.
Alfred Kammer, director of the IMF’s European Department, is briefing the media in Washington DC now.
Outlining the outlook for Europe’s economy, Kammer says:
We were ready for an upgrade on growth. And then, the war in the Middle East happened, and we now have a downgrade on growth and upgrade on our inflation forecast.
The Fund’s “reference scenario” is that the Iran war will shave 0.5% off euro area growth over the next two years.
In a more severe scenario, up to 1.7 percentage points could be cut off European GDP, he adds.
Britain's energy price cap forecast to rise 12% this summer
The jump in energy prices since the Iran war started is expected to push British energy bills higher this summer, but not by as much as previously feared.
Consultancy Cornwall Insight is now predicting that the energy price cap will rise by 12% in July, to £1,837 per year for a typical dual fuel consumer in Great Britain.
That’s lower than a few weeks ago – at the end of March, Cornwall forecast the cap would rise to £1,929 per year.
Since then, oil and gas prices have dropped, on hopes of a peace deal in the Middle East.
Updated
Jet fuel shortage could lead to flight cancellations in Europe, IATA says
Fears are growing that European airlines could start cancelling flights this summer unless supplies of jet fuel pick up back to pre-Iran war levels.
The International Air Transport Association’s director general Willie Walsh has suggested today that flights in Europe could be cancelled due to a lack of jet fuel starting from the end of May.
Walshe said:
“Along with doing everything possible to secure alternative supply lines, it’s important that authorities have well-communicated and well-coordinated plans in place in case rationing becomes necessary, including for slot relief.”
Yesterday the head of the International Energy Agency warned that Europe has only six weeks of jet fuel left before shortages will hit.
The drop in motor fuel prices, and in mortgage rates, today will provide a little help to UK families facing a cost-of-living squeeze.
New data from the Office for National Statistics has found that two-thirds (67%) of adults reported that their cost of living had increased compared with a month ago, up from 56% in February 2026.
The ONS says:
Among those reporting that their cost of living had increased compared with a month ago, the price of food shopping remained the most commonly reported reason (91%); the proportion reporting the price of fuel (75%) as a reason for increased living costs increased from February 2026, when it was 38%.
RAC: fuel prices start to drop
There is finally some relief for motorists at the pumps, after weeks of rising prices.
Petrol and diesel prices dropped yesterday for the first time since the Iran war started, and are a little lower today too.
This has pulled petrol to just below 158p a litre on average. However, that’s still 19% higher than before the conflict began, when a litre of petrol cost 132.83p.
The average cost of diesel has slipped to 190.94p – still 48p higher than at the end of February (corrected).
This follows a drop in wholesale fuel costs earlier this week.
RAC head of policy Simon Williams says:
“After 46 days of rising prices, the cost of both petrol and diesel across the country has finally begun to drop very slightly. Wholesale prices are still lower, so we’re hopeful there will be further reductions amounting to several pence a litre in the coming days.
After record rises, drivers will be relieved to finally see prices going the other way. While we’re a long way from a return to the prices we had at the start of the conflict, there’s now a glimmer of light at the end of the tunnel.”
Updated
Key charts: How insolvencies rose in March
The conflict in Iran is already taking a toll on businesses and balance sheets across the UK, warns Matthew Richards, joint head of restructuring & insolvency at accountancy and business advisory group Azets:
Richards says an increasing number of directors are seeking advice about their finances as they fear they will not be able to survive the economic aftershocks of the war in Iran, adding:
Directors who were previously surviving have been concerned about the impact the war will have on their finances, and the increase in costs it caused has been the tipping point for many firms. The longer this carries on, the bigger impact it will have on margins, access to finance and affordability of funding, as well as consumer spending as households attempt to manage their own costs and cut back on anything that isn’t essential.
“With the war likely to continue, cost pressures continuing to be a problem and additional expenses like the new business rates and the changes to national minimum wage taking effect this month, it’s very likely demand for insolvency support will increase in the coming months.
Involvencies in England and Wales up 7% in March
The UK could be facing a “mountain” of insolvencies, restructuring experts are warning, as the Iran war drives up costs.
New data today shows a 7% rise in the number of company insolvencies in England and Wales in March – up to 2,022, from 1,895 in February.
The increase appears to be due to the collapse of mortgage lender Market Financial Solutions last month, whuch collapsed after borrowing £1.3bn from a string of financial companies.
The Insolvency Service says:
The increase in March 2026 was mostly driven by more than 100 connected companies in the Real Estate sector entering administration.
That may mean March’s rise in insolvencies is “a one-off event”, the Insolvency Servuce suggests.
But expers are warning that the geopolitical crisis in the Middle East and the growing tax burden on businesses risks driving more firms under.
Giuseppe Parla, restructuring & insolvency director at Menzies LLP, says:
“Ongoing tensions in the Middle East are driving up energy and fuel costs, disrupting supply chains, and keeping inflation stubbornly above the Bank of England’s 2% target. The UK economy is expected to be among the most exposed in the developed world - yet much of this impact has not yet filtered through to company balance sheets or the latest insolvency data.
“Compounding this, the new tax year has brought a fresh wave of cost pressures. While there have been no headline rate rises, frozen thresholds, reduced reliefs and tighter allowances are quietly intensifying ‘fiscal drag’ - steadily increasing the tax burden on both businesses and consumers. Together, these twin pressures are squeezing margins and suppressing demand which risks driving more businesses into the red.
“This combination means we are likely at the foot of a mountain of insolvencies, rather than sitting at its peak. With cost pressures still building, consumer demand under strain, and uncertainty persisting, insolvency numbers are likely to remain elevated, or rise further, in the months ahead, posing a serious threat to the wider British economy.”
UK mortgage rates drop a little
UK mortgage rates have dipped slightly today, as some lenders begin to cut their offerings.
Moneyfacts reports that the average 2-year fixed residential mortgage rate today is 5.87%, down from 5.88% on Thursday.
The average 5-year fixed residential mortgage rate today is 5.76%, down from 5.77% yesterday.
Santander and TSB, and the Coventry and Skipton building societies, have all said they are cutting the cost of some fixed-rate mortgages, after hopes of a Middle East peace deal pushed down their borrowing costs.
Oil is slightly lower today, but still quite close to the $100 a barrel mark.
Brent crude futures are down 0.75% at $98.70 a barrel, after Donald Trump told reporters last night:
“We’re going to see what happens. But I think we’re very close to making a deal with Iran.”
But even if a deal was reached immediately, it would take weeks for oil and gas supplies to return to normality.
Before the crisis began, oil was trading around $72 a barrel, and jumped to almost $120 during March.
Electricity producers' shares fall as UK considers breaking pricing link with gas
Britain’s blue-chip share index has dropped slightly, pulled down by electricity producers.
The FTSE 100 share index is down 15 points, or 0.14%, at 10,577.
SSE (-4%) and Centrica (-3.5%) are leading the fallers, after the UK government indicated it is considering cutting the link between electricity and gas prices.
That link means that gas almost always sets the price of electricity under Britain’s marginal cost pricing model – meaning periods of high gas prices are painful for consumers (but lucrative for electricity producers).
Speaking in Washington yesterday, chancellor Rachel Reeves said she and energy secretary Ed Miliband were looking at the issue:
Reeves said:
“So, this is something that I’ve been attracted to for quite some time, delinking electricity and gas prices.
“At the moment, when gas prices are high, we end up paying more for our electricity, even though the cost of producing it doesn’t change.
“And so myself and Ed Miliband are now working to come up with a practical way that we can delink those prices.”
European stock markets have opened calmly, after a truce between Lebanon and Israel truce was announced yesterday.
With Donald Trump suggesting the next US-Iran meeting might take place over the weekend, hopes of de-escalation in the Middle East are lifting shares slightly.
While Gemany’s DAX is flat, France’s CAC 40 has gained 0.15% in early trading and Italy’s FTSE Mib index has risen by 0.25%.
This leaves the pan-European Stoxx 600 index on track to notch its fourth weekly gain in a row.
Derren Nathan, head of equity research at Hargreaves Lansdown, says:
Events in the Middle East remain the key market driver, and President Trump’s overnight comments on the potential for further peace talks between the US and Iran could boost equity markets today.
A ceasefire between Israel and Iranian proxy Hezbollah after Israeli/Lebanese talks in Washington provides further hope for de-escalation.
Updated
The jump in wheat prices comes as food inflation is already forecast to climb over the coming months.
Capital Economics predict UK food inflation could almost double by mid-2027, telling clients:
Outside of fuel and utilities, the prices of flights, other forms of transport, flowers and food are likely to rise the most in response to the Iran war. In our baseline scenario, food price inflation rises from 3.3% in February to 6.0% in the middle of next year.
Cuts to overseas aid will worsen shocks to global economy, David Miliband says
Cuts to overseas aid by countries including the US and the UK risk stoking global economic instability amid the humanitarian crisis resulting from the Iran war, David Miliband has told my colleague Richard Partington.
The former British foreign secretary and head of the International Rescue Committee (IRC) said the US “abandoning” of its aid programme under Donald Trump would worsen shocks to the global economy that would impact poor and wealthy countries alike.
Miliband also said he regretted that Keir Starmer’s government was slashing the UK’s aid budget, because supporting the world’s poorest was morally the right thing to do and a “good investment for Britain”.
The former Labour minister said:
“An untended humanitarian crisis is an incubator of political instability. We are in a more connected world than ever before.
“The Iran war shows how connected we are, but the connections go the other way [from poor to rich countries], too.”
Here’s the full story:
Introduction: Wheat price heading for biggest jump in two months
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A jump in the wheat price is adding to concern that the conflict in the Middle East will fuel food inflation this year.
Chicago wheat futures are up almost 4.5% this week, heading for their biggest weekly jump since February. Concerns about dry weather in the US, and the Iran war, are both factors.
The jump in fertiliser and diesel prices since the war began at the end of February have hit farmers’ costs, and could lead to lower harvest levels – especially as traffic through the strait of Hormuz remains largely blocked.
A new report from humanitarian group Mercy Corps this week has highlighted that disruptions to fuel, fertiliser, and shipping have rapidly transmitted to import-dependent economies, affecting planting seasons now underway in Somalia, Ethiopia, and Pakistan.
Food insecurity outcomes for 2026 and 2027 are now “locked in” for some of the world’s most fragile countries, Mercy Corps warns.
Its research shows:
Global fertiliser prices have surged during critical planting periods.
Fuel prices rose as much as 150% within days in some markets, driving up transport and water costs.
Commercial shipping through the Strait of Hormuz fell by more than 90%, constraining agricultural supply chains.
In Somalia, fuel spikes have doubled the cost of water in drought-affected areas.
Humanitarian shipments to Sudan are being rerouted via the Cape of Good Hope, adding roughly 6,000 miles and up to three weeks to transit times.
The World Food Programme estimates 45 million additional people could be pushed into acute hunger globally.
That comes as dry conditions in the US Plains threaten to curb wheat yields there. Data last week showed that more than half of the US is in drought, following low rainfall.
Dry weather in Australia, and the Black Sea growing region, are also hurting wheat yields there.
The agenda
10am BST: Eurozone trade data for February
1.30pm BST: IMF: Europe Department press briefing
6pm BST: Baker Hughes count of US oil rigs
