Oil stocks helped drive gains for the FTSE 100 and 250 on Monday, supported by firm crude prices amid continued tensions in the Middle East, and news of a bid for Aussie-listed Santos sparked interest in more merger and acquisition activity in the sector.
Shell PLC (LSE:SHEL, NYSE:SHEL) shares rose 1.4%, BP PLC (LSE:BP.) was up 0.5%, Harbour Energy PLC (LSE:HBR) climbed 1.5%, Ithaca Energy PLC (LSE:ITH) gained 2.3% and Kosmos Energy Ltd (LSE:KOS, NYSE:KOS) jumped 4.3%.
In the early hours, Santos jumped 11% as it said it was evaluating a A$30 billion (£14.4bn) takeover proposal from a consortium spearheaded by a subsidiary of the Abu Dhabi National Oil Company (ADNOC).
Meanwhile, the price of Brent crude oil held close to $75 a barrel, near its highest level in ten weeks. The oil market is reflecting geopolitical risk from the Israel-Iran conflict, though analysts noted that escalation fears have not yet been fully priced in.
Market analyst Kathleen Brooks at TXB noted that a significant widening of the conflict would likely push oil closer to or above $100 a barrel, but she pointed to Donald Trump's reported efforts to moderate Israeli actions as a factor preventing a sharper rally in crude.
Deutsche Bank’s Jim Reid highlighted that both Israel and Iran had so far avoided striking US targets, keeping diplomacy on a “knife-edge”.
Oil and energy stocks were among the top contributors to the FTSE 100’s rise, with the index up 41 points at 8,892 in morning trade.
Brent’s price strength followed a surge from under $70 to $78 on Friday. Despite easing slightly, prices remain supported as markets monitor potential developments in the region.
Kosmos shares are up over 30% in the past fortnight after it signed a partnership deal with Tullow Oil in Ghana.