Brent crude oil prices have surged to $97.58 a barrel following reports that Iran has halted message exchanges with the United States through mediators, demanding a cessation of Israeli operations in Lebanon and Gaza before any peace talks. This escalation has reignited fears of supply disruptions, pushing oil towards the $100 mark.
The jump in oil prices has exacerbated inflation concerns, leading to a sell-off in government bonds and a rise in yields. UK 10-year gilt yields climbed to 4.88%, up from 4.81% on Friday, reflecting expectations of higher borrowing costs.
Meanwhile, UK house prices fell for the first time this year in May, dropping 0.6% month-on-month, according to Nationwide. Annual growth slowed to 1.7%, as rising mortgage rates dampened demand. Housebuilder shares, including Persimmon and Barratt Redrow, fell sharply.
The pound weakened against the dollar, falling half a cent to $1.341, as investors sought safe havens. Chris Beauchamp, chief market analyst at IG, warned that oil could breach $100 again if tensions escalate, putting further pressure on equity markets.
