A 7% plunge on Monday, a brief strike-driven bounce and a further slide on Tuesday have put oil Volatility — and the FTSE 100's two oil majors — squarely in focus.

Monday's settlement price of $104.77 for Brent Crude might look like an unremarkable number. The route it took to get there was anything but. The international benchmark fell $8.66, or 7.63%, in a single session on Monday 2 November. Then, in Asian trade on Tuesday, it climbed back to around $105.25 on reports of a US strike on Iranian territory, before crude again slid about 2% over the day in volatile trade.

For the FTSE 100, such swings matter in a very particular way. Shell (LSE:SHEL) and BP (LSE:BP.) are two of the index's best-known constituents, and the oil price is one of the most powerful forces acting on sentiment towards them. This article sets out what drove the latest moves, why they matter for oil producers and the index more broadly, and the key events ahead. It does not forecast prices or company performance.

Anatomy of a volatile 48 hours

Reuters linked the turbulence to investors weighing talks aimed at ending the wars in Ukraine and Iran. WTI, the US benchmark, followed a similar path, settling at $96.46, down $7.66 or 7.36%.

The mood shifted quickly. Early on Tuesday, The Wall Street Journal, citing US officials, reported a US strike on Iran's Qeshm Island. Officials characterised the action as defensive, intended to stop Iran attacking commercial ships in the Strait of Hormuz. Tim Waterer, chief market analyst at KCM Trade, said the report "added a degree of risk premium back into the oil price."

Diplomacy remained in play. Iran said contacts with Washington were continuing, though Qatari-mediated talks ended without a breakthrough. By the end of Tuesday, Reuters reported that crude had slid about 2%, following Monday's roughly 7% drop.

The stakes are high because of geography. Before the conflict, which began in late February 2026, roughly one-fifth of the world's Crude Oil and Natural Gas shipments passed through the Strait of Hormuz. The conflict's reach is visible beyond energy companies, too: insurer Hiscox (LSE:HSX) said this week that a benign natural catastrophe period had more than offset marine losses linked to the Middle East conflict, a reminder of how disruption to shipping lanes ripples across sectors.

Why the oil majors feel it

In general terms, integrated oil companies' Earnings are influenced by the prices they receive for crude and gas, alongside refining margins, trading results and the performance of other divisions. Higher prices tend to support Upstream profits, while falling prices can weigh on them. The relationship is rarely one-for-one, however: hedging, production mix, costs and timing all play a part, and refining or trading can sometimes move in the opposite direction.

Share prices often react to oil moves faster than company earnings do, because investors try to anticipate how a sustained shift in prices might filter through. Sharp, two-way swings like this week's can make that exercise especially difficult, which is one reason energy stocks tend to attract attention when crude is volatile.

Investors following the majors in such conditions typically monitor:

Realised pricesversus benchmark prices such as Brent.

Production volumesand any disruption risks.

Refining marginsand trading performance.

Cost disciplineand Capital spending plans.

Shareholder distributions, including dividends and buybacks, and how sensitive they are to Commodity prices.

These are standard reference points, not expectations for Shell (LSE:SHEL) or BP.

The FTSE 100 is weighted by market capitalisation, so its largest companies exert the biggest influence on its level. When heavyweight sectors move together, the index can be pulled sharply in one direction. Tuesday showed this in action with other sectors: the FTSE 100 closed at 10,638.43, down 122.90 points or 1.14%, its steepest fall in a month, as miners and banks weighed. HSBC (LSE:HSBA), down 2.0%, was the biggest single drag in points terms, while the FTSE 350 basic resources index lost 2.6% as copper slid.

Commodity-linked stocks can therefore shape the index's day as much as any single piece of company news. When oil, metals and bank shares move in the same direction, the combined weight of large constituents in those areas can amplify the effect.

Oil, Inflation and rates

Oil's influence extends well beyond energy stocks. Reuters reported that elevated oil prices have fuelled inflation fears and that many central banks have raised rates. The Bank of England is widely expected to raise Bank Rate by 25 basis points from 3.75% to 4% on Thursday 5 November, which would be its first increase since August 2023. ING has said the worsening energy crisis has made it much harder for the Bank not to act, though, while expecting a follow-up hike in February, it says market pricing for further increases "looks extreme".

Currency adds another dimension. Oil is priced in dollars, while the FTSE 100 is quoted in sterling. With the pound at around $1.3417 on Monday, movements in the Exchange Rate can affect how dollar-denominated revenues translate for UK-listed companies.

The US midterm elections, held on Tuesday 3 November, are a further variable for global markets. Reuters said a Democratic showing was seen as priced in;

Key dates to watch

Thu 5 Nov:Bank of England MPC decision, with a rise to 4% widely expected.

Fri 6 Nov:IAG Q3 results, a read on the airline side of the oil trade.

Fri 6 Nov:US October jobs report.

Thu 12 Nov:ONS first quarterly GDP estimate for July to September, at 7:00am.

Wed 2 Dec:FTSE Russell December review announcement, after the UK close.

The bottom line

Brent's journey around the $105 mark this week — a steep fall, a brief geopolitical bounce and another decline — captures how quickly sentiment can turn when conflict and diplomacy collide. For Shell and BP, that volatility keeps them at the centre of attention, and because of their size it can feed directly into the FTSE 100's direction. With the Strait of Hormuz still a flashpoint, talks continuing and an expected rate rise on Thursday, oil looks set to remain one of the index's key swing factors in the days ahead.