London, 30 September 2026 — EBM Newsdesk Analysis — By Katie Winearls
On Wednesday, 30 September, the FTSE 100 made a strong gain in early trade as falling oil prices eased fears about inflation. European markets followed higher, after gains in Asia. JPMorgan estimates that crude exports from the Gulf have recovered to 17.5 million barrels a day on a 10-day average, around 98% of pre-war levels. Tankers are getting through the Strait of Hormuz, and Saudi Arabia’s East-West pipeline has restarted after attacks. The relief is real, but it stops at the refinery gate.
For Europe, the gap between crude and refined fuel is the story that matters. Global diesel stocks have been badly run down, so prices at the pump are not about to fall. There is still no deal to end the conflict, so energy prices will stay high and volatile. Britain is a case in point: household energy bills are set to rise 16% in January, just as many families are already dealing with higher mortgage or rent costs.
Why Markets Rallied
Two things lifted sentiment. The first was oil. After months of risk-off trading driven by Iran, physical supply is finally moving again. Washington is also offering to release up to 40 million barrels from its Strategic Petroleum Reserve, with one eye on November’s midterm elections and voters angry about fuel prices.
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SubscribeThe second was China. Its official manufacturing index moved back into growth in September, pointing to a pick-up in activity. China is the world’s biggest buyer of industrial metals, so mining stocks, which carry heavy weight in the FTSE 100, led the gains. Investors also moved away from the safe-haven dollar and back into riskier assets.
The Bank of England’s Dilemma
The Bank of England is watching for what economists call second-round effects. That means companies passing higher costs on through higher prices, and workers demanding bigger pay rises to keep up. Once that cycle starts, it is hard to stop. The ECB faces the same worry, as Lagarde has warned about eurozone inflation driven by the same energy shock.
The latest UK data offers some comfort. Second-quarter growth was revised up from 0.4% to 0.5%, and real household disposable income per head rose 1.0%. But that spending power is being eaten away as the energy crunch settles into something longer-lasting. Rising global bond yields are pushing up mortgage costs at the same time, a pressure felt from London to Paris.
Business Confidence Slides
Companies are already bracing. The Lloyds Bank Business Barometer showed UK business confidence falling 12 points to 41% in September, its lowest since April 2025. Smaller firms are feeling it most, because they have less of a cushion against weaker spending and rising bills.
Greggs shows how larger companies are responding. The baker plans to close four of its 14 UK factory and distribution sites, with 740 jobs at risk, and serve more shops from new sites in Derby and Kettering. The restructuring will cost £60m but should save around £20m a year. Shareholders welcomed it because store growth is untouched: Greggs still plans 100 to 110 net new shops this year and wants at least 3,500 in the long run, up from 2,796. Its value ranges are working in a cost-conscious market, with total sales up 7.7% over the past three months. New lines such as matcha lattes, egg protein pots and salads are drawing in more health-conscious customers.
Where This Goes
Wednesday’s rally is a relief trade, not a turning point. Crude is flowing again, but diesel is scarce, bills are rising and there is no peace deal. The Bank of England cannot cut rates while firms and workers are preparing for higher costs. Expect markets to swing with every headline from the Gulf. Companies that cut costs now, as Greggs is doing, will be better placed when this winter arrives.
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