London pre-open: Stocks to gain as oil slumps on US-Iran deal hopes

(Sharecast News) - London stocks were set to rise at the open on Monday as oil prices fell on hopes for fresh US-Iran negotiations.

The FTSE 100 was called to open around 30 points higher. At 0720 BST, Brent crude was down 5.2% at $83.39 a barrel, while West Texas Intermediate was 6% lower a $79.56.

Oil prices slumped as Donald Trump said talks with Iran will begin on Monday after the US refrained from carrying out new strikes against Tehran.

"Now what we're doing is we're talking to them in the form of a negotiation. It begins tomorrow afternoon," Trump told reporters on Air Force One on Sunday.

The US President said that at the request of Saudi Arabia, the UAE and Qatar, he called off the "biggest attack since World War II".

On home shores, EY nudged up its 2026 UK growth forecast but warned of a potential recession if the Strait of Hormuz stays closed until early-mid 2027.

According to its new UK Economic Outlook, the economy is projected to grow by 0.9% in 2026, up a touch on the 0.8% growth forecast in May. EY noted a better-than-expected performance in the second quarter as oil prices returned to pre-conflict levels more quickly than expected.

GDP growth is expected to rise to 1.2% in 2027, in line with the previous forecast.

EY said the recent escalation of Middle East tensions and disruption in the Strait of Hormuz and subsequent impact on energy prices and inflation are set to weigh on growth towards the end of the year, while a prolonged closure could cause the economy to contract next year. Around 20% of the world's oil supplies normally pass through the Strait.

The outlook's baseline forecast assumes the Strait of Hormuz reopens by the end of the third quarter of this year, albeit with subdued levels of tanker traffic. However, should the conflict escalate and the Strait remain closed until early or mid-2027, growth could fall to 0.5% this year and contract 0.2% in 2027.

Peter Arnold, EY UK chief economist, said: "The UK economy has proved more resilient than many expected this year, prompting a modest upgrade to our growth forecast. Oil prices had started to fall back to pre-conflict levels and, while business and consumer confidence have softened, this decline remains less severe than the shock triggered by the 2022 energy crisis. Ongoing disruption to global energy markets will now start to test this economic resilience.

"If the Strait of Hormuz reopens in the coming months, we expect the UK to avoid a more pronounced downturn, but an extended closure into 2027 would raise inflation and could push the economy into contraction next year.

"As growth becomes harder to sustain, the UK is likely to rely increasingly on those sectors that have underpinned economic performance in recent years, particularly technology and high-value business services. At the same time, longstanding pressures in construction remain a concern. Rising project costs, persistent labour shortages and weak productivity growth risk constraining the delivery of major infrastructure projects at a time when demand remains high. Enhancing productivity in the sector will be critical if the UK is to deliver its infrastructure ambitions while supporting broader economic growth."

In corporate news, takeover target easyJet said it had extended the put up or shut up deadline for both competing offers from private equity firms Castlelake and Apollo to 1700 BST on 7 August.

Castlelake had originally been set a deadline of 3 August, but as easyJet had been providing due diligence to both parties it had decided to align the dates. The low-cost carrier originally accepted a �5.5bn offer from Castlelake before switching to approval for a �5.7bn pitch from Apollo.

Shipping services group Clarksons said it expects full-year results "materially ahead" of market forecasts following a record first-half profit as it benefited from the volatility caused by disruptions in the Strait of Hormuz.

The firm, which plays an intermediary role in the movement of the majority of commodities, reported an underlying pre-tax profit of �61.5m over the six months to 30 June, up from �39.4m the year before, as revenues surged to �413.5m from �297.8m.

Engineering and manufacturing firm Senior said it had delivered a "strong" performance in the six months ended 30 June, with pre-tax profits sharply higher year-on-year as both its aerospace and flexonics divisions outperformed expectations.

Senior said group revenues rose 7% on a constantcurrency basis to �390.8m, while adjusted pre-tax profits increased 38% to �34.8m and adjusted operating profits increased to �39.1m, helping lift operating margins to 10%, up 170bps.