European Stocks Fall as US-Iran Conflict Rekindles Energy Supply Fears

European stock markets closed lower on Friday as renewed military tensions between the United States and Iran rattled investor confidence and intensified concerns about global energy supplies. The escalating conflict weakened risk appetite across financial markets, dragging major European indices into negative territory.

The pan-European Stoxx 600 index declined 0.7%, while Germany’s DAX dropped 1.4%. France’s CAC 40 fell 1.1%, and the UK’s FTSE 100 slipped 0.4% as traders reacted to growing geopolitical uncertainty in the Middle East.

Market sentiment deteriorated after the U.S. Central Command reported that American naval destroyers traveling through the Strait of Hormuz faced missile, drone, and small-boat attacks from Iran on Thursday. In response, the United States launched retaliatory strikes targeting Iranian port facilities in Bandar Abbas and Qeshm.

Iran strongly condemned the attacks, accusing Washington of breaking the fragile ceasefire agreement. Tehran also claimed that U.S. forces targeted Iranian oil tankers near Jask port and nearby coastal regions critical to shipping operations.

The latest conflict disrupted optimism that had recently boosted global equities. Earlier reports suggested Washington and Tehran were nearing a diplomatic framework for renewed peace negotiations expected to begin in Pakistan. Investors had hoped the talks would lead to the reopening of the Strait of Hormuz, a vital global oil shipping route that has remained effectively closed since the conflict intensified in February.

Rising energy prices also pressured corporate stocks. IAG, owner of British Airways, warned that higher jet fuel costs linked to the Iran conflict would reduce annual profits. Intertek shares fell after rejecting a takeover proposal from Swedish investment firm EQT, while Rightmove gained support after maintaining its 2026 outlook driven by AI-powered growth.

Political uncertainty in the UK added further pressure after Prime Minister Keir Starmer’s Labour Party suffered major local election losses to Nigel Farage’s Reform UK party.