The UK stock market has recorded its biggest weekly fall in eleven months, as the Middle East crisis has hit shares.

The FTSE 100 share index has closed 129 points lower today at 10,284, a drop of 1.24% during today’s session.

That means it has lost 5.75% of its value since the start of this week, its worst performance since the week to 4 April 2025, when Donald Trump’s “Liberation Day” tariffs rocked markets.

The sell-off came as oil surged – Brent crude is trading around $90.87 a barrel now, having hit $91.89 a barrel earlier, its highest in almost two years.

Oil is up over 6% today by 25% this week!

Reports that Kuwait had begun cutting production of oil at some fields, after running out of space to store it, pushed up the oil price today, as did Qatar’s energy minister who predicted that if the war continued unabated, all Gulf energy exporters would shut down production within weeks and oil would rise to $150 a barrel.

Investors were also rattled by a bad US jobs report, showing that America’s economy lost 92,000 jobs in February.

Analysts at TS Lombard warned that the green shoots in the US labor market have “turned brown”.

They predict an improvement will come, as a “positive fiscal impulse” will provide fresh demand to get the jobs market out the doldrums.

However, they add, this is “subject to energy effects and demand destruction from the Iran war”.

In other news:

Motoring body the RAC reports that fuel prices have risen steadily this week.

RAC Fuel Watch data shows that petrol has now increased by 3.7p to 136.53p a litre since Saturday, while diesel is up by 6p to a 16-month high of 148.35p.

RAC head of policy Simon Williams warns that there will be further price rises unless the oil price drops back:

This has already pushed up the cost of filling a 55-litre family car with petrol by £2 and diesel by nearly £3.30 in less than a week.

“While wholesale costs for any retailer buying in new stock will have gone up, it normally takes two weeks for price changes to work their way through to the forecourt.

Brent crude jumped to $85 on Thursday [now over $91] something we haven’t seen since July 2024. If the price of a barrel stays at this level, or increases, then further forecourt rises will be inevitable. While the rate of increase has been fast, we’re fortunately a long way from the record prices of 2022 when the average price of petrol hit 191.5p and diesel 199p.”

US crude oil price have also shot higher today.

WTI (West Texas Intermediate) is up almost 10% at $88.82 a barrel, the most expensive level since October 2023.

Kathleen Brooks, research director at XTB, says the oil price “took another leg higher” after Kuwait joined Qatar and said that it was halting energy production.

Brooks adds:

Donald Trump also brushed off hopes that mediation was taking place to end this war in the Middle East, instead he said that there would be no end until an ‘unconditional surrender’ of the Iranian regime took place, which seems unlikely in the near term.

This has dashed hopes that the conflict will be averted quickly, and the oil price has continued its push back towards $90, Brent crude is higher by 6% on the day and is now above $90 per barrel, and there is not much to stop it from hitting $100 per barrel in the near term. The relentless rise has also seen WTI crude rose by 9% today. Until the oil price stabilizes it’s hard to see how stock markets and bond prices can recover.

Having burst through the $90/barrel mark today, Brent crude now has the $100/barrel mark in its sights.

Brent, the international benchmark, is continuing to climb and hit $91.80 a barrel a few minutes ago, the highest since 12 April 2024.

As well as Kuwait’s decision to start cutting production, traders will have noted a statement from Donald Trump today that “will be no deal with Iran except UNCONDITIONAL SURRENDER!”

Wall Street has opened with heavy losses, as investors react to the surge in the oil price, the ongoing Middle East war, and a bad jobs report.

The Dow Jones industrial average, which tracks 30 large US companies, has fallen by 834 points, or 1.74%, in the first few minutes of trading to 47,119 points.

The broader S&P 500 index is down 1.6%, and the tech-focused Nasdaq index is down 1.65%.

The Russell 2,000 index, which tracks smaller US companies, has lost 2%.

Today’s US payrolls report is quite possibly “the worst situation that could have been imagined, in a week when a new Middle East war lit a fire under oil prices”, says Chris Beauchamp, chief market analyst at IG.

A loss of jobs, a downward revision to last month, a rising unemployment rate and increased wage growth amounts to a stonking quadruple whammy for the US economy. It’s hard to imagine a worse time for energy prices to start surging, but that is now the scenario for the Fed and the US economy.”

“Futures had been weak heading into today’s print, and a repeat of yesterday’s selloff is firmly on the cards now, especially ahead of a weekend when more airstrikes will occur and in a world where oil prices seem to be only going one way.”

Brent crude has now surged to $90 per barrel for the first time since April 2024, a gain of over 5% today.

This latest rally comes as the Wall Street Journal reports that Kuwait has begun cutting production at some oil fields after running out of room to store its bottled-up crude.

That would suggest the region is entering a broader storage crisis, in which a lack of storage leads to shutdowns, because tankers are reluctant to risk travelling through the strait of Hormuz.

The WSJ says:

The country, a founding member of the Organization of the Petroleum Exporting Countries, is discussing limiting its production and refining capacity further, to just what it needs to cover domestic consumption, the people said. A decision on those broader cutbacks is expected within days, they said.

Oil is now firmly on track for its biggest weekly gain since spring 2020.

Britain’s stock market has hit a one-month low, as the weak US jobs report worries investors.

The blue-chip FTSE 100 share index has dropped by 105 points, or 1%, to 10,309 points, its lowest level since 6 February.

Newsflash: The US economy shed over 90,000 jobs last month, in a worrying sign that the labor market is cooling.

Total nonfarm payroll employment fell by 92,000 in February, new data from the Bureau of Labor Statistics shows, missing forecasts of an increase of around 59,000 jobs.

The BLS says:

Employment in health care decreased in February, reflecting strike activity. Employment in information and federal government continued to trend down.

In another blow, December’s jobs report was revised down to show a loss of 17,000 jobs, not an increase of 48,000 as previouslyt reported.

January’s report was revised down by 4,000, from +130,000 to +126,000.

British government debt has had its worst week since Liz Truss spooked the markets with her mini-budget.

Reuters has the details:

Yields on five- and 10-year British government bonds were on course for their biggest one-week jump since former Prime Minister Liz Truss’ “mini-budget” over three years ago on fears of higher inflation caused by the Middle East conflict.

Ten-year gilt yields were up by around 10 basis points on Friday, hitting their highest since last October at 4.642%.

Over the course of the week, the rise stood at almost 40 basis points, the biggest such leap since September 2022 when Truss’ finance minister Kwasi Kwarteng delivered a fiscal plan that sent bond markets into turmoil and led to her resignation.

Away from the energy crisis, London is at risk of becoming a “childless city” due to soaring childcare and housing costs, a report by the London Assembly has warned.

The number of children living in the capital has fallen faster than anywhere else in the UK since the early 2010s, with the decline particularly pronounced in Inner London.

The London Assembly, a cross-party group that holds the London Mayor to account and investigates issues important to the capital, said the fall in children is having a notable impact on schools in the capital, since their funding is provided on a per-pupil basis. Since 2019, 100 schools in London have closed or been earmarked for closure.

Between 2013 and 2023, London’s population of under ten-year-olds fell by 99,100, despite the overall population of the capital increasing by 506,000 during the same period.

This is partly due to falling birth rates, which reached a peak in 2012 with nearly 135,000 births but have since fallen 20%, despite an increase in the number of women of childbearing age over the same period.

This fall in the number of children living in the capital has been blamed on childcare and housing costs. The weekly price for a full-time nursery place was 34% higher in Inner London (£319.24) than the England average (£238.95) after working parent entitlements were taken into account.

The typical home in London costs 11.1 times the average local salary, compared with 7.7 times across England. Rents in London are 60% higher than for England as a whole. The report also says parents feel the city is becoming less welcoming to children, citing examples such as an increase in ‘No Ball Games’ signs. In London alone, there are over 7,000 such signs.

The London Assembly said that empty school properties should be re-purposed as alternative temporary educational sites rather than sold, in case the pupil population recovers in the future. It suggested London should also seek to become a UNICEF Child Friendly City to make it better suited for young families.

Brent crude is heading close to the $90 a barrel mark!

Sustained pressure has pushed the crude oil benchmark up to $89 a barrel, for the first time since April 2024.

Qatar’s warning (see earlier post) that all Gulf energy exporters would shut down production within weeks, if the Iranian war continues, appears to be sending energy prices spiralling higher.

Reminder: Qatar’s energy minister, Saad al-Kaabi, said:

“Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure.”

This morning’s surge in the oil price means Brent crude is now on course for its biggest weekly gain since early in the Covid-19 pandemic.

Brent has now jumped to $87.66 a barrel, up over 2.5% today, meaning it has surged by over 20% this week to its highest since July 2024.

That would be the biggest weekly gain since the week to 1 May 2020.

Prices are surging after Qatar’s energy minister warned that war in the Middle East could “bring down the economies of the world”, predicting that all Gulf energy exporters would shut down production within weeks and drive oil to $150 a barrel.

Saad al-Kaabi told the Financial Times that even if the war ended immediately it would take Qatar “weeks to months” to return to a normal cycle of deliveries following an Iranian drone strike at its largest liquefied natural gas plant.

Kaabi told the FT:

“Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure.

If they don’t, they are at some point going to pay the liability for that legally, and that’s their choice.”

Brent crude has now hit its highest level in 20 months.

The benchmark oil price has just traded at $87 a barrel, for the first time since 5 July 2024.

That’s going to add to concerns of an inflation spike rippling across the global economy.

Halifax has warned that the US-Israel war on Iran could slow mortgage rate decreases this year, as it said that house price growth eased dramatically in February.

Halifax, which is part of Lloyds – Britain’s biggest mortgage lender – said the conflict in the Middle East was likely to affect global economies, stoke inflation and reduce the likely rate of interest rate cuts that influence borrowing costs for homebuyers.

The lender said the value of a typical UK home rose 0.3% in February to £301,151.

However, this is a significant dip in the rate of growth compared with the 0.8% recorded in January that fuelled average house prices passing the £300,000 mark for the first time.

The Guardian spoke to a crew member on one of the stranded tankers in the Gulf, that typically ferries vast quantities of oil from the Middle East to ports around the world.

They told us:

“When [Donald] Trump said Iran had 10 days to agree to his deal or bad things would happen, I did the math and thought we might get stuck here. And we did.

From a cabin below deck, they explained how the crew watched explosions light up the sky as they loaded the vessel with crude oil at an industrial complex in the Gulf. More here.

The chances of a cut to UK interest rates soon are continuing to dwindle.

A cut in March is now just a 16.5% chance according to the City money markets – down from 80% last week before the Iran war began.

The markets are now pricing in just 21.5 basis points (0.215 percentage points) of cuts by December, meaning that a single quarter-point cut is no longer fully priced in either.

Oxford Economics’s Michael Saunders, a former Bank of England policymaker, says central banks want to push back against risks that energy price shocks feed through to inflation expectations.

Saunders writes that the length and magnitude of the energy spike is highly uncertain, adding:

Our updated assumptions assume the energy price shock is relatively short-lived, but the effects on inflation and risks of second-round impacts will be greater if the conflict is more drawn out.

Against this backdrop, the Bank of England’s Monetary Policy Committee is likely to remain on hold for now, keeping policy in restrictive territory.

International Monetary Fund managing director Kristalina Georgieva has warned that a 10% increase in energy prices that persists for a year would push global inflation up by 40 basis points and slow economic growth by 0.1-0.2%.

Speaking to Bloomberg TV, Georgieva said:

“The world economy has been remarkably resilient. Shock after shock, and yet growth is at 3.3%.

But this resilience is being tested yet again.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The oil price is on track for its biggest weekly gain in four years, fuelling fears of an inflation spike that will reignite the cost of living crisis and hurt growth around the globe.

The Iran conflict has driven Brent crude, the international benchmark, has soared by 17.65% this week to over $85 a barrel. That would be the biggest jump since the week to 4 March 2022, after Russia invaded Ukraine.

Oil has been driven up to the highest levels in 19 months by shortages worries, following attacks on refineries in the region by Iran this week, and on ships in the region.

Ship traffic in the strait of Hormuz has ground to a near-complete halt, according to the Joint Maritime Information Center, the multinational naval advisory group.

The JMIC said in a note that only two confirmed commercial transits had been observed through the strait in the past 24 hours, which were cargo ships and not tanker vessels.

In normal times, around 138 vessels would pass through the strait in a 24-hour period. Now, though, a high concentration of vessels remain at anchor, drifting and at berth in the Arabian Gulf ports, it says.

JMIC’s security threat rating for the area remains “CRITICAL”, which indicates an attack is almost certain.

The agenda

• 7am GMT: Halifax house price index for February

• 1.30pm GMT: US non farm payrolls employment data for February

• 1.30pm GMT: US retail sales report for January