Oil topped $103 a barrel Thursday as reports emerged that the United States had intercepted at least three Iranian oil tankers in Asian waters, deepening uncertainty over how long the Middle East conflict will last and what it will do to global energy supplies.
Brent crude rose nearly 1.5% to $103.34 per barrel, rattling already fragile investor sentiment in Europe. The FTSE 100 fell 0.5%, Germany's DAX dropped 0.4%, and Italy's FTSE MIB lost 0.3%. France's CAC 40 edged up 0.3%, a rare bright spot in an otherwise downbeat session.
The tanker interceptions follow an extension of the Iran war ceasefire, but the Strait of Hormuz remains blocked, a choke point for roughly a fifth of the world's oil supply. European markets had already closed lower on Wednesday as investors weighed that blockage against the fragile ceasefire extension. The fresh tanker reports sent Asian markets retreating after Japan and South Korea had briefly hit record highs overnight.
Germany's Economics Ministry cited the Iran war and Hormuz closure directly in a forecast revision released this week, cutting its 2026 GDP growth projection in half, to 0.5%. The 2027 forecast was trimmed from 1.3% to 0.9%. Officials warned that energy costs for households and businesses have already risen, and projected inflation would reach 2.7% this year and 2.8% in 2027. Europe's largest economy is feeling the conflict's weight more acutely than most.
UK grocer Sainsbury's added to the cautionary tone, warning that the Middle East conflict risks weighing on its profit, according to Bloomberg. The warning reflects how the war's economic reach is spreading well beyond energy markets into consumer-facing businesses dependent on stable supply chains and confident shoppers.
Not every earnings report was grim. L'Oreal posted its fastest quarterly sales growth in two years, sending shares up 8.1% at the open for what was shaping up to be the stock's best day since March 2022. Nokia shares jumped 7% after the Finnish telecom company reported first-quarter operating profit of 281 million euros, up 54% year-on-year and ahead of analyst estimates, on 4% net sales growth.
Defense contractor Saab fell 3% despite beating operating profit estimates. The Swedish firm reported first-quarter order bookings of 18.2 billion kronor, down 5% from a year earlier, as fewer large contracts came through in the quarter. Sales of 19.1 billion kronor missed expectations, though organic sales growth came in at 23.6% and operating profit jumped 32% to 1.92 billion kronor.
Thursday's European session brought a heavy earnings slate, with Roche, Nestle, SAP, Sanofi, Heineken, and Renault among the companies reporting. Flash PMI readings for the eurozone and UK were also due, offering a fresh read on how businesses and services sectors are holding up under the weight of the war and its economic fallout.
