Oil prices surged and markets slid after Donald Trump warned the US would hit Iran “extremely hard”, as Sir Keir Starmer set out a more cautious UK response.
Speaking from the White House, the US president urged allies to "build up the courage" to secure shipping through the Strait of Hormuz, despite saying the US was not dependent on the route.
His speech rattled markets, with oil prices jumping to $106 a barrel and stocks falling sharply in Asia.
Ahead of the address, Iran's foreign ministry dismissed Trump's claim that Tehran had sought a ceasefire as “false and baseless”.
Speaking separately at a news conference yesterday, Sir Keir Starmer said the UK would pursue closer economic ties with the European Union in light of the war in Iran.
He confirmed plans to use an upcoming summit with the EU to seek more cooperation as uncertainty in global markets grow.
It comes as relations between the US and UK have been increasingly strained by the prime minister's refusal to be more involved in the Iran conflict.
He said: "It is increasingly clear that as the world continues down this volatile path, our long-term national interest requires closer partnership with our allies in Europe and with the European Union".