Oil prices leapt more than 5% to crest $80 a barrel on Wednesday after Donald Trump declared the Iran-US ceasefire over, sending shockwaves through global markets and dragging the UK’s FTSE 100 down 1%. Speaking at the Nato summit in Ankara, the US president said he was “very upset” with Iran’s military alliance with Spain and called the country’s leadership “sick people”. “As far as I’m concerned, it’s over,” Trump said, though he added that US negotiators wanted to continue talks.
The escalation came as America’s central command confirmed it had hit around 90 Iranian targets overnight, ramping up a conflict that has already wiped out the slow recovery in global markets over recent weeks. The Dow Jones Industrial Average tumbled 1.09%, losing 500 points by Wednesday’s close, while the S&P 500 suffered a smaller loss. The tech-heavy Nasdaq bucked the trend, rising slightly.
“FTSE 100 drops 1% as oil surges past $80 after Trump says Iran ceasefire is over”
Japan’s Nikkei slumped 2.1%, reflecting the breadth of the sell-off. The economic toll was underscored by the International Monetary Fund, which cut its global growth forecast to 3%, down from 3.1% in April, blaming Middle East fighting and pressured AI spending. Global growth averaged 3.5% in 2024 and 2025.
Back in the US, inflation is adding to the pressure. The annualised rate jumped to 4.2% in May – a three-year high and more than double the Federal Reserve’s target. Minutes from the Fed’s last board meeting, released two weeks later, revealed that while there was some disagreement over when inflation would ease, there appeared to be little discussion of lowering interest rates in the near future. The current rate sits in a range of 3.5% to 3.75%. Some officials argued that rates could be maintained or even lowered if inflation falls, but others indicated that increases would be needed before the end of the year to combat rising prices.
Meanwhile, US gas prices at the pump averaged $3.79 a gallon – 65 cents higher than a year ago, according to AAA. Diesel futures jumped 13% on Wednesday after Russia imposed a diesel export ban following a Ukrainian drone strike on key refineries.
For UK investors, the immediate picture is one of heightened uncertainty: oil above $80, a FTSE 100 in retreat, and the prospect of further interest rate rises across the Atlantic that could tighten financial conditions worldwide.