The FTSE 100 continued its upward climb this morning as markets absorbed speculation that the Middle East is nearing oil production limits, pushing the price of commodity stocks higher.

The blue-chip index was up 1%, or 70 points, at 7,328 as the price of Brent crude rose to $117 a barrel amid speculation that oil-producing giants United Arab Emirates and Saudi Arabia are operating at almost full capacity.

Investors were also digesting news that the G7 is edging closer to putting a price cap on Russian oil and gas. At the meeting of rich nations in Bavaria, leaders are focused on how to tighten the economic screws on Russia after its invasion of Ukraine while avoiding a backlash on western economies. 

Richard Hunter, head of markets at Interactive Investor, said the ongoing dynamics were acting as a tailwind for the commodity-heavy UK market. ‘Some further pressure on sterling gave the FTSE 100 a small head-start in early exchanges, leaving the UK’s premier index down by just 0.8% in the year-to-date,’ he added. 

Rolls-Royce (RR) was one unlikely winner from plans to replace Russian gas, as the aerospace engineer rose to the top of the main index. Its shares added 4.4% to trade at 85p on the potential for its small modular reactors as a cheaper and faster source of nuclear power. 

The top gainers among oil and mining stocks included:

• Rio Tinto (RIO) up 3.6%, or 183p, at £52.34;
• Anglo American (AAL) rising 3.4%, or 107p, at £32.41;
• Glencore (GLEN) gaining 2.9%, or 13p, at 465p;
• BP (BP) advancing 2.6%, or 10p, at 402p;
• And Shell (SHEL) firming 2.5%, or 53p, at £21.65.

The FTSE 250 had an unsteady start to the day, bouncing in and out of positive territory to trade around 19,330. Hunter said the mid-cap index is inevitably seen as ‘a more accurate indicator of the UK economy and its prospects’. He noted its 17% decline so far this year ‘with increasing pressure to come from inflation, interest rate rises, and a potentially deteriorating consumer backdrop’.

Petrofac (PFC) was the biggest mid-cap winner, climbing 4.3%, or 5p, to 124p, despite performance at the oil and gas services engineer being hit by delays and rising costs.

Hargreaves Lansdown analyst Laura Hoy said ‘higher oil prices and strong demand for onshore and offshore asset management [is] keeping a floor under profits’.

Babcock (BAB) rose 3.5%, or 10p, to 311p as the aerospace and nuclear engineer followed peer Rolls-Royce higher.

Commodity stocks were again big risers, with Ferrexpo (FXPO) up 3.1% at 148p and Diversified Energy (DEC) adding 3% to reach 117p.

Among investment companies, the rising oil price helped BlackRock Energy & Resources Income (BERI ) rally 4.75% from a 9% discount to 114.2p, while BMO Commercial Property (BCPT ) rose 3.3% from a 22% discount to 118.2p.

Fidelity Japan (FJV ) found favour on an 8% discount to gain 3% to 156.2p, but debt fund CVC Income & Growth (CVCG ) slid 3% from a 7% discount to 91.8p.

Apax Global Alpha (APAX ) eased 0.8% to 182.5p as the private equity trust committed to invest $700m in the new Apax IX fund which will invest in tech, services, healthcare and consumer internet.

Biopharma Credit (BPCR ) firmed 0.3% to 94 US cents on the expectation that it will receive $3m-$7m in early repayment fees from Epizyme, whose $110m loan from the company will be paid off as a result of its acquisition yesterday by Ipsen of France.