WEDNESDAY MARKET CLOSE: Oil price surges

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Oil and gas firms saw shares advance as fears of an escalating crisis in the Middle East pushed the price of Brent Crude beyond $115 a barrel.

The turmoil was less positive for the rest of the market, although Bank of England governor Mark Carney’s reassurance that interest rates will remain low helped the FTSE 100 claw back most of its early losses. The index closed 10.91 points lower at 6,430.06.

Nick Dale-Lace, senior sales trader at CMC Markets, said: “Commodity prices have come into sharp focus this week as the likelihood of a Western intervention in Syria increases. As oil rockets higher on the prospect of further instability in the region, so too does gold as investors abandon equity markets and flock to the perceived safe haven of the yellow metal.”

Royal Dutch Shell jumped 44p to 2,221p and BP added 5.55p at 452.65p. BG Group trumped them both with a gain of 57.5p, or almost 5 per cent, at 1,267.5p.

But Brent’s biggest one-day rally in six months was bad news for those with high fuel bills. British Airways owner IAG endured its second successive say on the fallers’ board as shares dropped a further 4.5 per cent, to 287p. EasyJet declined 22p to 1,212p.

Industrial stocks with a dependency on stable oil prices and global economic conditions also suffered, with engines giant Rolls-Royce down 22p to 1,092p and car parts firm GKN off 7.3p to 324.1p.

Banks were higher after Carney unveiled details of a £90 billion boost to lending and said well-capitalised lenders will be allowed to lower their reserves of liquid assets such as cash and bonds. Royal Bank of Scotland led the gains, up 5.9p to 336p. Lloyds added 1.26p at 73.89p.