BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL) were helping the FTSE 100 cut losses compared to other European markets on Thursday, as oil prices remained elevated due to exchanges of missiles and threats between Israel and Iran.
BP shares were up 1.7% and Shell 1.1% in late morning trading. Over the past month the pair's shares are up 7.6% and 9% respectively.
Crude oil prices were being supported around four-month highs, with Brent up 0.8% in morning trading to $77.33 a barrel and West Texas Intermediate rising 1.4% to $76.18 a barrel.
Since the start of June, prices had climbed from four year lows of below $62 for Brent and $57 for WTI.
Prices edged higher earlier in the week ahead of today’s Juneteenth federal holiday in the US, with analysts at SP Angel saying traders were "positioned for any sign that the US might join Israel’s offensive against Iran, which would likely escalate the conflict".
Attacks between Israel and Iran entered their seventh day, with "lingering confusion" over potential US involvement, said macro strategists at Deutsche Bank.
Today, Israel's defence minister, Israel Katz, said he had instructed the military to intensify strikes on strategically related targets in Tehran in order to eliminate the threat to Israel and to destabilise the “Ayatollah regime”.
One newswire reported that he had made a direct threat of assassination of the Ayatollah, something that Donald Trump has been said to be against earlier this week.
In turn, Iran's deputy foreign minister said: if the US actively intervene to support Israel, Tehran will have to use its tools to defend itself and "teach aggressors a lesson", the ISNA news agency reported.
Yesterday, US President Donald Trump shrugged off questions as to whether the US would strike Iranian nuclear facilities, saying “I may do it, I may not do it”, adding later that he had not yet made “the final decision”.
The Wall Street Journal later reported that Trump privately approved of attack plans, but held off on the final order to see if Tehran will abandon its nuclear program, while Bloomberg reported that US officials were preparing for a possible US strike on Iran in the coming days.
There were also newswire reports that an Iranian delegation had travelled to Oman, where earlier US-Iran talks had taken place.
Risk assets have been up and down, with the S&P 500 trading 0.6% higher yesterday morning, but giving up those gains to close slightly lower, while the Deutsche team noted that "a sign of some easing in perceived risks" was that the VIX 'fear gauge' retreated by 1.46pts to 20.14, while gold fell 0.55%.