Brent crude moved toward the psychologically important $100 level this week, reviving inflation concerns and pressuring rate-sensitive stocks even as equity markets largely avoided panic. On Tuesday, London’s FTSE 100 fell 0.6% to 10,816.59, while the FTSE 250 slipped 0.24%. Energy majors BP and Shell rose 1.5% and 0.7% respectively as Brent approached $99 after fresh attacks on Saudi energy facilities. Mining shares also cushioned the index after copper hit a record above $14,600 a tonne on the London Metal Exchange, with Antofagasta up 3.6% and Glencore up 1.2%.
The broader mood was more cautious. Expensive energy risks keeping inflation elevated and could make central banks more hesitant to cut borrowing costs. Markets expect the Bank of England to leave rates unchanged at its September 17 meeting, and upcoming UK GDP data plus US PPI and CPI prints later in the week will shape global rate expectations. Domestic-facing UK stocks weakened, with banks down about 0.8%, personal goods down 1.5% and retailers down roughly 0.9%. Dunelm tumbled more than 12% after warning that unusually hot weather had weakened early-year trading, even after Deutsche Bank analysts had upgraded the stock to Buy days earlier.
By Wednesday, Brent crude had climbed to about $99.5 in Asian trade, while WTI rose toward $94.6 as attacks on tankers, Gulf energy facilities and US forces intensified. Yet global equities continued to treat the move as an expensive nuisance rather than a full-scale energy shock. The S&P 500 fell 0.6% on Tuesday and the Nasdaq lost only 0.3%, while South Korea’s KOSPI rose more than 1% and Japan’s Nikkei 225 was near flat. The International Energy Agency estimated that about 20 million barrels a day of oil normally move through the Strait of Hormuz, roughly a quarter of global seaborne trade, but Saudi Arabia and the UAE retain an estimated 3.5 million to 5.5 million barrels a day of pipeline capacity that can bypass the strait. Goldman Sachs analysts noted that OECD commercial inventories have barely fallen since the war began and raised their year-end Brent forecast to $90 rather than adopting a permanently triple-digit base case.
Still, the risk is not absent. Higher crude can eventually feed into fuel, freight and consumer prices. Nic Puckrin of Coin Bureau told Barron’s that unusually high diesel crack spreads risk pushing costs through transport, logistics, manufacturing and retail. Bond markets were already reflecting the inflation concern, with the US 10-year Treasury yield closing around 4.81% on Tuesday, its highest since 2023. Friday’s US CPI report is seen as the bigger test: if inflation stays contained, equities may keep treating Brent near $100 as manageable, but a decisive push above $100 that keeps central banks tighter for longer would make the current calm harder to sustain.
