Global Markets Slide as US-Iran Diplomacy Collapses and Hormuz Blockade Threatened

Global equity markets faced immediate pressure on Monday, with the FTSE 100 starting the trading week firmly in the red. The sell-off follows the abrupt collapse of diplomatic efforts between Washington and Tehran, erasing hopes for a peaceful resolution to ongoing tensions. The geopolitical instability is centered on the Strait of Hormuz, one of the world's most critical maritime chokepoints for oil exports. A blockade of this region would severely disrupt global energy supplies, potentially triggering a sharp increase in crude oil prices and fueling global inflationary pressures. President Donald Trump has explicitly threatened to implement a blockade of the strait, a move that would likely escalate the conflict from diplomatic failure to direct military or economic confrontation. Such an action would impact not only regional stability but the entire global energy infrastructure. Investors are reacting to the heightened risk of supply shocks. The FTSE 100's decline reflects broader anxiety regarding energy security and the potential for a wider regional conflict in the Middle East, leading to a flight from risk assets.