Global Financial Markets React to Middle East Conflict and Strait of Hormuz Closure

In early April 2026, global financial markets experienced significant volatility due to the ongoing conflict in the Middle East involving Iran and the United States. U.S. President Donald Trump's statements about intensifying military actions against Iran and his suggestion that other nations should take responsibility for reopening the Strait of Hormuz led to sharp declines in stock indices worldwide, including the FTSE 100, Dow Jones, and Asian markets. Oil prices surged, with Brent crude exceeding $108 per barrel, as the closure of the Strait of Hormuz, a critical shipping route for oil and gas, disrupted energy supplies. This caused mortgage rates in the UK to reach three-year highs, with five-year fixed deals averaging 5.78%, as traders anticipated interest rate hikes by the Bank of England to combat inflation. The conflict also impacted jet fuel and diesel prices, with jet fuel reaching over $1,900 per ton and diesel surpassing $200 per barrel in Europe. Airlines such as Wizz Air and EasyJet saw stock declines due to rising fuel costs. Diplomatic efforts were underway, with UK Foreign Secretary Yvette Cooper hosting a virtual meeting of over 40 countries to discuss reopening the strait, while French President Emmanuel Macron deemed military action unrealistic. The situation strained international relations, with Trump's rhetoric affecting the pound and UK government borrowing costs. Business inflation expectations in the UK rose to 3.5%, the highest in over two years, reflecting broader economic uncertainties.