The FTSE 100 dipped sharply as global oil prices fell, spurred by renewed optimism about Iranian output. Markets that had been buoyed by a steady rise in energy costs are now seeing a reversal, with the index trading below its previous high. Energy‐heavy stocks such as BP and Shell opened lower, reflecting concerns that lower crude prices will squeeze margins across the sector.

Investors remain cautious as the oil slump could dampen corporate earnings, especially for firms that rely on higher energy costs to support profit growth. Meanwhile, the UK’s broader market is expected to lag against peers in Europe, where gains in technology and consumer sectors are outpacing the energy slowdown.

Analysts point to a mix of geopolitical easing in the Middle East and a stronger dollar as the main drivers behind the fall in oil. They warn that if the trend continues, the FTSE 100 could face a prolonged period of lower volatility as the market recalibrates to a new oil baseline.

Despite the downturn, some UK companies are hedging against further price swings, suggesting that the index may stabilize once trading returns to a more balanced energy outlook.