Middle East Conflict Sparks Significant Drop in UK Stocks

The UK's primary stock indexes recorded their most significant weekly drop in nearly a year, driven by the conflict in the Middle East which has heightened inflation fears. Economists are closely monitoring the market reaction as investors grapple with these developments.

The blue-chip FTSE 100 fell by 1.2%, and the FTSE 250 decreased by 0.8% on Friday. Both indexes faced their worst week since the April 2025 downturn sparked by U.S. President Donald Trump's ‘Liberation Day’ tariffs. Meanwhile, shares of major oil companies Shell and BP saw a rise as Brent crude reached over $90 a barrel due to strategic blockages in the Strait of Hormuz.

Anticipating further disruptions, Qatar's energy minister predicts all Gulf energy producers will cease exports soon, potentially propelling oil prices to $150 per barrel. These soaring prices have led traders to scale down expectations for a Bank of England rate cut, reducing the likelihood to a mere 15%. Further compounding the economic anxiety is a decline in U.S. job numbers, signaling potential weaknesses in the global economy.