Shares in the FTSE 100's leading banks experienced a rise on Monday, as escalating conflict in the Middle East sparked inflation concerns.
Barclays and Natwest saw an increase of nearly two per cent, while Lloyds rose over one per cent during early trading, as oil prices climbed another one per cent to $74.90 a barrel, as reported by .
This comes after a surge of over nine per cent on Friday following Israel's strikes on Iran's nuclear programme.
Standard Chartered, meanwhile, secured second place among the index's risers, jumping nearly three per cent. The bank's gains were bolstered by easing trade tensions between the US and China, with rising inflation fears due to oil prices providing an additional boost.
Richard Hunter, head of interactive investor, commented: "The oil price, which initially spiked by more than seven per cent, could have an almost immediate impact on inflation at a time when rising prices are coming to the fore as a result of the tariff introductions."
Increased inflationary pressure could prompt a more hawkish stance from the Bank of England, which has cut interest rates four times in the past year.
Such a reduction in cuts would be good news for lenders, who reaped record profits in 2024 thanks to high interest rates post-financial crisis.
Bank of England to hold or trim rates on Thursday
The Bank of England's monetary policy committee (MPC) is set to decide whether to trim or hold rates on June 19.
Economists predict that the MPC will maintain rates at 4.25 per cent, adhering to a 'gradual and careful approach.'
Huw Pill, the bank's chief economist, expressed last month that he believed rates had been reduced too swiftly, partly due to the risk of "stubbornly strong" wage growth impacting overall inflation.
The ongoing conflict in the Middle East could potentially add more weight to the MPC's decision, as the rising oil prices fuel inflation concerns.
However, Hunter stated: "For the Bank of England, there is likely to be some reference to the inflationary potential of the rising oil price, although this will play second fiddle to a labour market which is showing some signs of softening."
"This could, in turn, reduce pressure on wage growth inflation, although the central bank's currently measured and cautious approach is likely to leave their stance on monetary policy unaltered for the time being."
