TLDR
- The STOXX 600 dropped 0.6% as U.S.-Iran tensions escalated
- Brent crude jumped over 2.6% to $85 a barrel, building on a 9.6% surge from the prior session
- Trump announced a naval blockade on Iranian shipping and a 20% fee on Strait of Hormuz cargo
- Airlines Air France and Lufthansa fell around 2% each on higher fuel cost fears
- Fed Governor Waller warned rates may rise if inflation stays above 2%, with CPI data due today
European stock markets fell on Tuesday as fresh military strikes against Iran and a U.S. shipping blockade drove oil prices to a one-month high, rattling investor confidence across the region.
The pan-European STOXX 600 slipped between 0.4% and 0.6% in early trade. Germany’s DAX fell 0.3%, France’s CAC 40 dropped 0.6%, and London’s FTSE 100 and Italy’s FTSE MIB both edged lower.
The selloff was driven by rising geopolitical risk after U.S. President Donald Trump announced a naval blockade on Iranian shipping in the Gulf. The U.S. also said it would impose a 20% fee on commercial cargo passing through the Strait of Hormuz.
BREAKING: President Trump says the US is reinstating its blockade of the Strait of Hormuz for Iranian ships and customers.
Trump says the US will now be known as "The Guardian of the Strait of Hormuz" and will be "reimbursed" at a rate of 20% on all cargo shipped.
It appears… pic.twitter.com/MtjidgWMMM
— The Kobeissi Letter (@KobeissiLetter) July 13, 2026
This came after a third consecutive night of U.S. military strikes against Iran. The moves reversed what had looked like a period of calm just weeks after a Middle East agreement appeared to have ended hostilities.
Oil Surges, Airlines Hit Hard
Brent crude futures jumped more than 2.6% to $85 a barrel. That followed a 9.6% surge in the previous session, putting the benchmark at its highest level in a month.
Energy stocks were one of the few bright spots, rising 1.4% as higher oil prices lifted the sector. BP shares rose 3% after the company said its oil trading results are expected to be slightly better in the second quarter compared to the first.
Airlines took the hardest hit. Air France and Lufthansa each fell around 2% as rising fuel costs squeezed profit margin expectations. Travel and leisure stocks as a whole dropped 2%, leading sectoral declines across Europe.
Rate Fears Add to Market Pressure
Beyond the Middle East, investors were also watching for fresh signals on U.S. interest rates. Federal Reserve Governor Christopher Waller warned that the central bank may need to raise rates if inflation continues running above its 2% target.
That put the focus on U.S. Consumer Price Index data due later in the day. Newly appointed Fed Chair Kevin Warsh was also set to begin two days of congressional testimony, adding to the uncertainty.
Markets are entering second-quarter earnings season with a cautious mood. Major U.S. banks were due to report results later on Tuesday.
Stock Movers
On the corporate side, Ericsson fell 8% after its quarterly sales missed estimates and it warned of rising component costs.
Evotec dropped 30% after the German drug discovery firm cut its 2026 outlook, saying key partnerships have been pushed back to 2027.
Hapag-Lloyd bucked the trend, rising nearly 6% after updating its yearly guidance.
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