Ftse 100 plunges almost 200 points as oil prices surge past $100

The sharp drop has not been seen since the second week of January.

The mid-cap FTSE 250 suffered even heavier losses. It slid 2.3 per cent as investors moved away from riskier assets.

The sell-off comes as markets react to a sharp supply shock caused by the worsening conflict in the Middle East.

Iran's blockade of the Strait of Hormuz has pushed crude oil prices to levels not seen since 2022.

Not all companies were hit by the downturn. Energy giants benefited from the surge in oil prices.

Shares in BP and Shell both rose around two per cent as Brent crude climbed to $119 per barrel.

The miners one of the biggest fallers, with Anglo American down 6.3 per cent and Antofagasta down 5.7 per cent. Copper prices are down to around three-week lows.

Travel companies were among the worst affected as investors worried about the impact of higher fuel costs.

Shares in International Airlines Group, the owner of British Airways, fell five per cent. The stock dropped 16.8 per cent to 346.5 per cent.

Banking shares also came under significant pressure amid fears that elevated energy prices could trigger an economic slowdown.

Barclays dropped three per cent while Lloyds Banking Group retreated two per cent.

Luxury retailer Burberry fell four per cent and Rolls-Royce shares plunged six per cent, among the heaviest fallers on the blue-chip index.

The benchmark Brent crude price rocketed more than 25 per cent to reach $118 per barrel as Asian markets opened, marking the largest single-day jump in six years.

At its peak, oil touched nearly $120 per barrel, heights not witnessed since the summer of 2022 when Russia's invasion of Ukraine sparked a global energy crisis.

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The price surge follows Iran's decision to block the Strait of Hormuz, a vital shipping lane through which approximately one fifth of global oil supplies pass.

The conflict has also devastated regional production, with Iraq's output collapsing to 1.3 million barrels daily from 4.3 million previously.

Stock markets across the continent mirrored London's distress, with Frankfurt's Dax index sliding 2.5 per cent and the Paris Cac 40 falling 2.4 per cent.

Kathleen Brooks, an analyst at XTB, said: "This is likely to be another rough day for stocks and bonds as they sell off sharply."

Investment analysts at Edmond de Rothschild warned of broader consequences, stating: "If the crisis persists, a sustained rise in energy prices could simultaneously weigh on household purchasing power, business costs, and margins."

Goldman Sachs has predicted oil could reach $150 per barrel by year's end should the Middle East conflict remain unresolved.