European stocks edge higher as oil nears $100 amid Iran conflict

By 04:04 ET (08:04 GMT), the pan-European Stoxx 600 had edged up by 0.1%. Germany’s Dax and France’s CAC 40 also rose 0.1%, while the U.K.’s FTSE 100 gained 0.4%. The moves came as traders assessed the impact of oil prices climbing back above the $100 per barrel threshold.

Oil price surge and Middle East tensions

The joint U.S.-Israeli assault on Iran has continued into a third week and is affecting the wider Middle East region. Saudi Arabia reported intercepting more than 60 drones flying over the country, though its defense ministry did not specify the origin or targets of the devices.

Tanker traffic in the Strait of Hormuz, which is surrounded on three sides by Iran and carries about a fifth of the world’s oil supply, has been effectively closed by Tehran. This disruption has sent energy prices sharply higher and darkened the outlook for the global economy.

Brent oil futures rose 2.7% to $105.90 per barrel, while U.S. West Texas Intermediate crude futures gained 2.0% to $98.75 a barrel. U.S. President Donald Trump has called on seven nations to help Washington maintain security through the strait, but he has not indicated whether any have agreed.

Inflation, ECB outlook and impact on European markets

For Europe, a major importer of energy products that pass through the Strait of Hormuz, the stoppage threatens to reignite inflation in a region that had recently appeared to have contained price growth. The continent’s recently stagnate economy faces additional pressure from higher energy import costs.

As oil and gas prices have spiked, borrowing costs across Europe have also risen, partly reflecting concerns that the European Central Bank may be forced to reconsider interest rate increases. The Stoxx 600 index has come under pressure, declining by more than 5% from its pre-war peak.

The ECB, along with other major central banks including the Federal Reserve, is scheduled to announce its latest monetary policy decision later this week. Despite the conflict in the Middle East, economists surveyed in a Reuters poll expect the ECB to keep interest rates steady for the rest of 2026.

FAQ

How did major European stock indices perform at the open?
The Stoxx 600, Dax, and CAC 40 each rose by 0.1%, while the FTSE 100 gained 0.4% by 04:04 ET (08:04 GMT) on Monday.

What is driving the increase in oil prices?
Oil prices are rising due to the ongoing conflict involving Iran, the effective closure of tanker traffic in the Strait of Hormuz by Tehran, and resulting concerns over global oil supply.

Why is the Strait of Hormuz significant for Europe?
The strait is a vital waterway through which about a fifth of the world’s oil supply passes. Europe is a major importer of energy products that traverse this route, making it vulnerable to disruptions.

What is the current expectation for ECB interest rates?
According to a Reuters poll cited in the report, economists expect the European Central Bank to keep interest rates steady for the rest of 2026, despite the ongoing Middle East conflict.