The Ftse 100 has collapsed back into the red in response to Iran exiting peace talks with the US, which resulted in a spike in oil surges immediately after.
London's benchmark stock market index fell from just north of 10,400 points to around the 10,320 mark as trading began to wind down for the day.
The price of crude oil has jumped back to around $93 per barrel amid ongoing uncertainty over how the US-Iran war will come to an end.
Last week, it was understood a peace talk between President Donald Trump's administration and the Islamic Republic was being finalised
The Ftse 100 has once again slipped back into the red
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However, reports suggest the White House is calling for key changes before the deal is signed to ensure the Strait of Hormuz remains open.
The key trading route for vassals has remained effectively closed since the start of the war, which has impacted the wider global economy as it used to transport 20 per cent of the world's natural gas and oil.
Under the latest rumoured proposal, there would be a 60-day cessation on fighting between the US and Iran, moves to reopen the Strait of Hormuz, and a framework to restart talks regarding the Islamic Republic's nuclear capacity.
Yesterday, Iran's chief negotiator Mohammad Bagher Ghalibaf, signaled his Government would not sign a deal that hurts the rights of Iranians.
Oil prices have shot back up to around $93 per barrel
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The Ftse 100 has slipped into the red amid ongoing geopolitical concerns
|A White House spokesperson said: "President Trump will only make a deal that is good for America and satisfies his red lines. Iran can never possess a nuclear weapon."
Looking at the Footsie, easyJet plc posted the biggest gains of 8.9 per cent, followed by Sage Group plc, which jumped up 4.5 per cent.
Today's biggest Ftse loser was Babcock International Group, which saw a 2.5 per cent per cent during trading hours.
Tom Stevenson, an investment director at Fidelity International, said: "As meteorological summer arrives, the mid-year news lull has come early, with very little for investors to focus on in terms of economic data or company news.
The City of London is anxious over the stock market's peformance | PA"Even the big geopolitical news story in the Gulf seems to have taken a pause, with neither side showing much sign of blinking.
"That has left investors sticking to the prevailing positive AI narrative as the main driver of markets. And last week provided a ninth consecutive weekly rise in global stocks, the best performance since 2023 and among the longest winning streaks of the post-war era.
"There may be growing talk of a valuation bubble, concerns about an oversupply of new equity as the big AI IPOs get underway, and fears of persistent inflation, but the glass remains half full for investors.
"The rally is supported by higher earnings and rising margins and for now that’s enough to keep the bull market on track."