European stock markets showed little direction on Friday, even as oil prices remained high, after U.S. President Donald Trump said he would extend a deadline tied to possible renewed air attacks on Iran's energy infrastructure.
By 04:02 ET (08:02 GMT), the pan-European Stoxx 600 was largely flat. Major national benchmarks were similarly subdued - Germany's Dax and France's CAC 40 were mostly unchanged, while the U.K.'s FTSE 100 inched up by 0.4%.
In a social media post on Thursday, President Trump said the extension of the deadline came at the request of Iran's government and that Tehran had engaged in ongoing discussions with Washington. Tehran has denied that such negotiations are taking place.
The statement follows an ultimatum Mr. Trump issued last week that threatened strikes on Iranian power plants if Iran did not act to reopen the Strait of Hormuz within 48 hours. Early on Monday the president gave Iran until Friday to meet that demand, before announcing the extension.
Market participants remained focused on the operational status of the Strait of Hormuz. The strategic waterway off Iran's southern coast - through which roughly one-fifth of global oil passes - remains effectively closed to tanker traffic. That shutdown has disrupted imports for consuming nations and raised the prospect of an energy-driven contribution to inflationary pressure on the global economy.
There were limited indications that the conflict was nearing a resolution. The situation, which the article characterizes as a conflict that has been ongoing since joint U.S. and Israeli forces first bombarded Iran in late February, showed new signs of escalation in the form of media reports of fresh missile exchanges between Israel and Iran on Friday.
Diplomats from the Group of 7 countries are scheduled to meet in France, with the administration's appeals for international assistance to reopen the Strait of Hormuz expected to be prominent on the agenda. According to the reporting, those calls for help to unblock the waterway have been largely rebuffed so far.
Amid the diplomatic and military developments, oil prices held firm as the trading week drew toward a close. The Brent crude futures contract for May delivery was last reported up 1.2% at $109.25 a barrel, recovering much of a decline experienced earlier in the week and remaining well above pre-conflict levels.
Key takeaways
- European equity indexes were mostly unchanged as markets awaited further developments on U.S.-Iran tensions.
- Energy markets remain under strain: the Strait of Hormuz is effectively closed to tanker traffic, underpinning higher oil prices and adding inflation risk.
- Diplomatic efforts, including an upcoming G7 meeting in France, are focused on reopening the Strait of Hormuz, but international support has been limited so far.
Risks and uncertainties
- Continued closure of the Strait of Hormuz threatens oil supply routes and may sustain upward pressure on energy prices - affecting the energy and broader inflation-sensitive sectors.
- Renewed military exchanges between regional actors create the possibility of further escalation, with potential consequences for global energy markets and risk sentiment in equities.
- Limited international cooperation so far to reopen the strait means diplomatic efforts may not quickly resolve transportation disruptions, prolonging economic and market stress.
Investors and policymakers will be watching both diplomatic channels and on-the-ground developments closely, given the implications for supply, inflation and the outlook for risk assets across Europe.