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The London market is returning from the Bank Holiday break to an expected fall as tensions in the Middle East are simmering over again leading to the price of oil moving higher.
Brent crude – the international benchmark for oil prices – climbed over $91 per barrel on Tuesday, extending gains from the previous session as the renewal of strike action in the Middle East raised concerns about further disruptions to energy flows from the region.
It follows the US launching strikes at Iranian rocket launchers that were reportedly preparing to lay mines in the Strait of Hormuz, marking the first exchange of fire in more than a month. Since then, Iran has responded targeting US military bases in Jordan and the United Arab Emirates.
Achilleas Georgolopoulos, senior market analyst at Trading Point, said fresh military operations were pushing the oil price higher. But he added the rally appeared to “lack [the] momentum” needed to push it above previous highs seen during the conflict.
“While no one is surprised by these events, expectations for progress in the US-Oman-Iran negotiations have clearly taken another hit,” he added.
The White House last week signalled that it was shelving military measures in favour of a method to destroy the Iranian economy through enforcing sanctions.
But Trump has suggested military action is back on the table after Iran’s retaliation.
“We’re going to hit them hard. There will be a response.” Trump told Fox News. He also branded Iran “officially a failed nation without an airforce, a navy or a currency”.
We’ll be bringing you the latest market updates and analysis.