The FTSE 100 (^FTSE) closed 1.45 percent lower at 10,659.13 on Friday, recording its weakest single-day performance since July amid a convergence of geopolitical and monetary policy risks.

The benchmark had reached 10,823 on Thursday, leaving it roughly flat for the week after Friday’s sharp reversal wiped out recent gains.

Losses spread across European markets, with Germany’s DAX falling approximately 1.6 percent and France’s CAC 40 shedding 1.5 percent in a broad regional selloff.

The immediate trigger for market anxiety was a tanker struck by an unknown projectile in the Strait of Hormuz, one of the world’s most strategically critical oil-transportation corridors.

U.K. Maritime Trade Operations confirmed that the resulting fire was extinguished and the crew was safe, but the incident was enough to rattle investor confidence across energy-sensitive markets.

Iran’s Revolutionary Guard subsequently claimed responsibility for the attack, stating that the vessel had entered Iranian waters without authorization, adding a significant geopolitical dimension to the incident.

Markets were further unsettled by reports that Saudi Arabian Oil Company (TADAWUL: 2222), commonly known as Saudi Aramco, had informed at least two European refiners that they would not receive crude allocations the following month.

The supply reduction came after an attack on Saudi Arabia’s East-West pipeline, which serves as an alternative oil export route when Hormuz shipments are disrupted, compounding concerns about regional energy stability.

Brent crude initially rose on the developments but later reversed, declining approximately 1.4 percent as traders weighed reports that Saudi Aramco could move around 60 million barrels through Gulf terminals during September and October.

The oil-price retreat offered little reassurance to equity investors, who remain concerned that further attacks could raise transportation costs and reignite inflationary pressures across the global economy.

Despite the market turmoil, U.K. retail sales data released Friday delivered a clear upside surprise, with volumes rising 0.5 percent in August according to the Office for National Statistics, against economist expectations of a 0.2 percent decline.

Sales were also 2.4 percent higher than the same period one year earlier, suggesting that household spending remains resilient even as consumers face elevated borrowing and energy costs.

Under ordinary circumstances, stronger retail activity would have supported consumer-facing businesses, but on Friday the data reinforced expectations that the Bank of England may need to keep monetary policy restrictive for longer.

The Bank of England held its benchmark rate at 3.75 percent on Thursday while warning that inflation could climb above 4 percent during early 2027, framing the stronger spending data as a complication rather than a comfort.

Airtel Africa plc fell approximately 11.3 percent following reports that the planned initial public offering of its Airtel Money subsidiary could be reduced in size, making it among the session’s worst individual performers.

BT Group plc declined 5.45 percent and Vodafone Group plc (NASDAQ: VOD) lost 4.25 percent as the telecommunications sector came under broad selling pressure throughout the session.

Gambling operator Entain plc fell 5.15 percent, while clothing and home-products retailer Next plc declined 4.76 percent, reflecting weakness across consumer-exposed names despite the strong retail sales print.

Financial stocks also dragged on the index, with Barclays plc (NYSE: BCS) dropping 3.48 percent and Lloyds Banking Group plc (NYSE: LYG) falling 2.90 percent as interest-rate sensitivity weighed on the sector.

The FTSE 100 is often regarded as relatively defensive given its international revenue base, energy exposure, and large dividend-paying constituents, yet Friday demonstrated that these characteristics offer limited shelter when geopolitical and rate risks rise at the same time.

Investors will now be watching oil-shipping conditions in the Strait of Hormuz, Saudi export volumes, and any shift in Bank of England rate guidance as the key variables shaping market direction in the weeks ahead.