FTSE 100: Oil Majors BP, Shell See Pullback After Ceasefire

Highlights

• FTSE 100 opened stronger following de-escalation in Middle East tensions

• Energy stocks including BP (LON:BP) and Shell (LON:SHEL) recorded declines

• Travel and airline companies like IAG (LON:IAG) and EasyJet (LON:EZJ) moved higher

The oil and gas sector, a core component of the FTSE 100, responded swiftly to geopolitical developments following a confirmed ceasefire between Israel and Iran. Market sentiment shifted on news that tensions in the Middle East have calmed, leading to notable fluctuations in global commodity prices and broader market movements.

BP and Shell Respond to Crude Price Movement

Brent crude oil, which had spiked in recent sessions due to escalating conflict in the region, eased back, prompting a retreat in share prices of key energy producers. BP (LON:BP.) and Shell (LON:SHEL), both prominent constituents of the FTSE 100, experienced declines during early trading, reflecting the sharp reversal in oil pricing.

Energy Price Impact Felt Across FTSE Indices

Energy companies often move in tandem with oil price trends, and the latest developments curbed earlier gains driven by supply disruption fears. The FTSE 100’s morning rebound coincided with this retreat in crude benchmarks, a market recalibration around lower supply.

The broader FTSE indices also witnessed renewed strength, supported by optimism surrounding a stable oil supply route through the Strait of Hormuz. This strategic waterway plays a critical role in global energy transportation, and concerns over its accessibility had previously added upward pressure to oil valuations.

Airline and Travel Stocks Advance

While energy stocks faced downward adjustments, aviation and travel sectors recorded gains as carriers adjusted schedules back to normal. International Consolidated Airlines Group (LON:IAG), the parent firm of British Airways, and EasyJet (LON:EZJ), saw notable price upticks. These companies had earlier curtailed or rerouted operations due to airspace uncertainties, and easing conflict concerns improved the sector outlook.

Defence Sector Moves Lower

Defence firms, including BAE Systems (LON:BA), traded lower during the session, contrasting the positive movement in consumer-facing segments. The shift traders and institutions moved out of defense and into travel-related equities as conflict headlines faded.

Global Sentiment Reflects in Regional Indices

Index movements mirrored wider Asia-Pacific market behaviour, with benchmarks in Japan and China also opening higher. UK-based airline stocks benefited from the global sentiment shift, bolstered by expectations that international routes may see fewer disruptions if the ceasefire.

The broader FTSE 350 and related indices registered modest improvements, aligning with cooling geopolitical tensions and easing commodity cost concerns. In particular, sectors sensitive to energy and logistics costs responded in kind, reflecting a repricing based on changing fundamentals.

Dividend-Linked Stocks Follow Commodity Fluctuations

Dividends from companies such as BP and Shell place them within scans like the FTSE Dividend Yield Scan, though their market performance is subject to rapid adjustment in line with commodity and geopolitical trends. Despite dividend relevance, market focus remained squarely on real-time energy pricing dynamics.

Operational Activity Remains Unchanged

No announcements or supply-chain disruptions were reported by either BP or Shell. Their share movements followed commodity-led cues, a common pattern for heavyweights in the oil and gas industry during periods of international unrest.

Defence Names Adjust to Conflict Easing

Meanwhile, companies tied to the defence sector experienced valuation changes following conflict de-escalation. BAE Systems, long a leader in aerospace and security solutions, adjusted lower, reduced urgency around supply or service expectations in short-term military operations.

Currency Strength Reflects Market Optimism

Currency markets also reflected renewed confidence, with the pound strengthening slightly against major peers. Although not directly impacting listed companies, currency strength can influence export-oriented sectors, affecting price action on the index.

Travel Sector Benefits from Reopening Routes

Early session behaviour on the FTSE 100 reflected this sectoral rotation. As tensions ease and energy prices moderate, market participants shifted focus to industries poised to benefit from stability in travel corridors and reduced operational cost pressures.

Travel-related names, typically impacted by fuel costs and geopolitical volatility, found favour as international coverage stabilised. These shifts continued throughout the trading session, with stock performance moving in line with sector expectations and the underlying news cycle.