Oil falls below $100 a barrel on reports Iran makes strait of Hormuz offer; UK government borrowing paints dismal picture – business live

Oil has now hit a new low of $97.50 a barrel.

That's still some way above its pre-Iran war levels of around $72 a barrel, though.

Oil is continuing to drop, and has touched a two-week low.

It's now traded as low as $98.33 a barrel, its lowest since 8 September.

Shares in BP have dropped by 2.5% following the dip in the oil price below $100 a barrel this morning.

It's the biggest faller on the FTSE 100 share index, followed by weapons producer BAE Systems (-2%), as hopes of a diplomatic resolution to the Iran war pick up again.

Kyodo also reports that Iran's proposal has already been conveyed to Washington through mediators, and calls for renewed talks aimed at reaching a permanent end to hostilities between the two countries.

However, the senior Iranian government official they site also ruled out a meeting between Iranian President Masoud Pezeshkian and U.S. President Donald Trump on the fringes of the gathering, while alo saying progress toward an agreement remains possible.

Newsflash: The oil price has dipped below the $100 a barrel level.

This follows a report on the Kyodo news service that Iran has offered to reopen the Strait of Hormuz within seven days if the United States takes initial steps toward easing military pressure.

One senior Iranian government official told Kyodo:

“There is a possibility of moving toward an agreement.â€

But the official added that Washington must demonstrate “seriousness and commitment†if diplomacy is to advance.

Neil Wilson of Saxo Markets says:

Pressured by its exports grinding to a halt the economic toll is being felt in Tehran and it seems to be pinning hopes on this offer ending the stalemate.

This looks too good an offer for Trump to turn down ahead of his key week with Xi and with polls indicating voter dissatisfaction of his handling the Iran war and economy ahead of the mid-terms, which are looking like the Democrats could take both houses.

As ever with US-Iran chatter and rumours this needs to be taken with a grain of salt but should it hold it's going to mean crude holds lower, which would take the pressure of bond yields.

Back to the UK government's higher-than-expected borrowing of £18.3bn in August.

Susannah Streeter, chief investment strategist at the Wealth Club, said:

Tax speculation is ramping up ahead of the budget, especially given the latest snapshot of the government coffers shows prime minister Andy Burnham and chancellor John Healey are walking an increasingly tricky tightrope when it comes to the public finances.

That is prompting fresh speculation about a potential increase in capital gains tax, particularly if reported plans to raise the personal income-tax allowance from £12,570 become a reality. If the government is looking to put more money into people's pockets by reducing their income-tax bill, it would need to find the money elsewhere, and CGT is increasingly being talked up as a potential source.

For investors, the prospect of a higher CGT bill could mean some simply decide not to sell assets and hang onto them instead. But there are alternatives, including tax-efficient investment schemes that can shelter returns while also directing capital towards British businesses, laying the seeds for future growth.

Government-backed venture capital schemes support young businesses which are seen as crucial to driving economic growth and the creation of high-value jobs for the future. Investing in these schemes is a bit like following in the footsteps of angel investors, but rather than backing a single start-up, you're spreading your investment across a portfolio of young, ambitious businesses.

In the retail sector, the B&Q and Screwfix owner Kingfisher has raised its full-year profit outlook, despite a sharp drop in bathroom sales at its B&Q chain and the impact of the heatwaves on certain products.

Kingfisher shares jumped 8.5% on the profit upgrade.

An 8.1% drop in big ticket sales at B&Q in the three months to 31 July was mainly down to bathrooms, while kitchens saw “good sales,†Kingfisher's outgoing chief executive Thierry Garnier said, adding that the company will refresh its bathroom ranges. He described the consumer climate as “mixedâ€. The DIY chain's overall like-for-like sales fell 1.8% over the period, its second quarter.

The multiple heatwaves over the summer, which also affected France, Poland and Spain, led to a “relatively complicated season,†Garnier added. Airconditiong units and fans had “outstanding salesâ€, but the company sold fewer building materials, indoor and outdoor paint.

Ahead of the budget on 28 October, Garnier said Kingfisher's number one priority are business rates, calling on the government to create a level playing field between brick & mortar and online retailers. (Only physical retailers pay business rates, a property tax.)

That will create more and issues in the future.

We very much hope that we have positive news on business rates for the retail industry in the coming weeks.

He hopes that larger stores won't be penalised in business rates reform.

Turning to the crisis in youth unemployment – nearly 1 million 16- to 24-year-olds are not in employment, education or training (Neet) – Garnier said there has been a shortage of trained people in the UK for years.

He added that Screwfix has a strong apprenticeship programme and has recently joined an initiative with the industry body, the British Retail Consortium, to provide work experience placements for young people (called Open Shift).

B&Q and Screwfix support around 1,000 apprenticeships each year and in the most recent year, more than 600 people finished their apprenticeship, including 347 from Screwfix.

Garnier resigned in May after nearly seven years as CEO to become the boss of the Dutch-Belgian supermarket group Ahold Delhaize, but remains in post for now, as he has a 12-month notice period. He said the Kingfisher's succession plan is “moving at paceâ€.

Kingfisher made an adjusted profit before tax of £404m ‌in the six ‌months to 31 July, up nearly 10% on last year, helped by cost cutting measures and a one-off £14m business rates refund. Total sales rose 0.8%, while like-for-like sales (at outlets open at least a year) edged 0.3% higher.

The company raised its profit forecast for the 2026-27 year to between £595m and £635m, from £565m to £625m.

The pound has dipped to its lowest level since late July this morning, Reuters points out.

It hit $1.3331 before a small recovery.

The Institute of Economic Affairs, the right-wing, free-market thinktank, argues that today's public finances shows the government “cannot tax its way out of Britain's fiscal problemsâ€.

Dr Valentin Boboc, senior economist at the IEA, says:

“Borrowing is already £8bn higher than the OBR expected at this point in the financial year, putting further pressure on the Chancellor ahead of the Budget.

“The problem is not weak revenues. Tax receipts are rising strongly, but spending is rising faster. With debt approaching £3 trillion and the cost of servicing it remaining painfully high, further tax rises would only paper over the cracks.

“The Chancellor needs to get a grip on spending and focus on reforms that can deliver stronger economic growth. Without that, Britain will remain stuck in a cycle of higher spending, higher taxes and disappointing growth.â€

[The government, though, might point out that Brexit – which the IEA saw as a major opportunity – has rather hampered UK growth]

Philip Shaw of Investec has highlighted how UK government spending rose faster than income in August, which pushd up the monthly deficit:

The scale of the borrowing was principally due to the relatively low growth of tax receipts of 3.8% on the year, particularly VAT (+1.7%) and excise duties (-0.4%).

Current spending (excluding interest payments) was 4.9% higher, similar to the trend for 2026/27 so far. Interest payments were £8.8bn, modestly (£0.4bn) above those in August last year.

The oil price has shrugged off a brief dip below the $100 a barrel mark yesterday.

This morning, Brent crude is up 1.1% at $101.50/barrel, as traders continue to assess the hopes of a diplomatic breakthrough in the Middle East.

Yesterday afternoon, Brent fell below $100 a barrel for the first time in a fortnight. That appeared to be due to relief that the US had not renewed its bombing campaign against Iran, as Tehran had warned on Sunday.

Hopes that US president Donald Trump could meet Iranian president Masoud Pezeshkian during the United Nations General Assembly in New York later this week also pushed oil lower.

But concerns over an escalation in the region remain. Earlier this morning, Saudi Arabia's civil defence body issued an alert in its Najran region, amid ongoing hostilities between the kingdom and Yemen's Iran-backed Houthis. That alert has now been lifted.

In the travel sector, Germany's Tui has reported falling summer and winter revenues for its tour operations and airlines, but flagged better trading in the last four weeks, as people book later in light of “geopolitical and economic uncertaintyâ€.

The travel company said summer 2026 revenues were down 5%, but highlighted a 2% rise in the last four weeks. Summer trading was worst in the UK, down 7%, while revenues dipped 2% in Germany, but Tui managed to stick to its selling prices.

Greece and Spain, including the Balearics and Canaries, were the most popular summer destinations.

Winter bookings have fallen 7% overall, with a 9% decline in the UK and a 4% drop in Germany. The Canaries, mainland Spain, Egypt and Cape Verde are expected to form the core of Tui's winter programme, similar to other years, along with the long-haul destinations Thailand, Mexico and the Dominican Republic.

The company narrowed its outlook for â 2026 â underlying operating profits, saying â demand was strong for â its holiday experiences ‌portfolio in ‌the fourth ‌quarter. Tui now expects annual underlying earnings before ‌interest and taxes to reach between €1.2bn and €1.3bn, rather than the previously forecast €1.1bn to €1.4bn.

Its cruises and resorts business was affected by the Jamaica hurricane.