Russ Mould, investment director at AJ Bell, said: “Once again the FTSE 100 was protected from the worst of the falls on Thursday as its higher exposure to the energy sector helped support the UK stock index.
“Nonetheless, UK stocks were still in the red as investors reacted to ongoing disruption to energy markets from the Middle East conflict.
“Oil prices surged through the $100 per barrel mark for the second time this week.
“Defence and defensive stocks were in demand as investors looked for places to hunker down and ride out the current turbulence.
“Psychologically, oil being above $100 is a red alarm bell for the market in the way a price of $99.99, while a negligible difference on paper, wouldn’t be.
“Iran has warned of $200 oil as it continues to target key infrastructure and the shipping routes through the Strait of Hormuz.
“While it is in Iran’s interests to engage in this sort of wild speculation, the longer we go without a viable path to de-escalation the bigger the impact this energy shock is likely to have.
“One knock-on effect from a world of higher oil and gas prices is to potentially make the economics of renewable energy more attractive.
“German utility RWE, which has significant exposure to renewables, has reported better-than-expected results.
“Its next big venture involves gas-fired power plants in the US as it looks to tap into the AI-driven data centre boom.
“Fortunately for RWE, the US is self-sufficient in natural gas so these plans, even if the rise in gas prices elsewhere proves long lasting, should be relatively unaffected.”
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