FTSE 100, DAX futures sink as Trump escalates Iran stance; oil jumps 6%

European equity futures dropped sharply on Thursday after US President Donald Trump warned of severe military action against Iran, reviving fears of a prolonged Middle East conflict and sending oil prices to their highest levels in months.

The moves came as energy markets were already reeling from strikes launched by the US and Israel against Iran on 28 February.

The development triggered a wave of retaliatory attacks across the Gulf and drove Brent crude up more than 60% in March, the biggest monthly gain since records began in the 1980s.

Markets fall as war fears return

Euro Stoxx 50 futures fell 2% in early trade on Thursday, while DAX futures lost 1.9% and FTSE 100 futures were down 0.9%.

French CAC 40 futures were broadly flat.

The declines reversed a tentative rally from the previous session and reflected renewed concern that the conflict between the US and Iran was widening rather than approaching resolution.

Oil spikes on conflict timeline

Brent crude futures surged more than 6% to $107.98 a barrel after Trump's address, in which he vowed that US forces would strike Iran "extremely hard."

Energy markets had been on edge since the US-Israel strikes intensified, prompting Iranian retaliation, and Trump's latest remarks reinforced the view that supply disruptions could persist for weeks.

Pharma tariffs add a further drag

The Trump administration is moving to impose tariffs on pharmaceutical companies that have declined to accept lower drug prices in the US market, with multiple companies now in the administration's sights, according to Bloomberg.

Levies could be introduced within weeks, CNBC reported.

The threat added an additional layer of pressure on equity sentiment already strained by energy-market volatility.

Corporate and sector watch

Royal Dutch Shell is in discussions with Venezuela's government to explore four areas within some of the world's largest offshore natural gas reserves, Reuters reported.

In the aviation sector, Ryanair's chief executive has warned that the United Kingdom faces the greatest exposure among European carriers to a jet fuel shortage stemming from the Iran conflict.

Three variables are likely to drive market direction in the sessions ahead: the trajectory of the Iran conflict and any ceasefire signals; the scale and duration of oil supply disruptions through the Strait of Hormuz; and the timing and scope of the administration's pharmaceutical tariffs.

With oil prices and equities having fallen in tandem for weeks, any clarity on the conflict's duration would carry outsized market significance.