The FTSE 100 index closed yesterday flat, as a surge in energy stocks offset escalating tensions between the US and Iran. The benchmark index rose by just 0.01% to 7,563.92 points, despite oil prices increasing by over 10% in recent days.
US President Donald Trump's decision to impose sanctions on Iran following the country's breach of the nuclear deal has sparked concerns about regional stability and global supply chains. The UK's energy giants, including BP and Royal Dutch Shell, have seen their shares rise by up to 4%, driven by a 12% increase in Brent crude oil prices to $68.55 per barrel.
The sector's resilience is underlining its importance as a driver of economic growth in the UK. According to data from the Office for National Statistics, the energy sector has consistently contributed around 10% to the country's GDP over the past five years. The sector's strong performance suggests that the UK's economy may be more resilient than expected to external shocks.
While the crisis between the US and Iran raises global concerns about trade and politics, the FTSE 100 index has been relatively insulated from the impact, driven by the performance of energy stocks. With oil prices remaining elevated, investors are likely to continue to take a cautious approach to markets in the coming days.
The UK Government has maintained a close watch on the situation, with Chancellor Sajid Javid speaking to Bank of England Governor Mark Carney about potential implications for the UK economy.