Oil prices were on the rise at the start of the week after Donald Trump launched an attack on Iran via Twitter.
In a tweet delivered in capital letters, the US president threatened Iranian leader Hassan Rouhani, warning him to "never ever threaten the United States again or you will suffer the consequences the likes of which few throughout history have ever suffered before".
To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!— Donald J. Trump (@realDonaldTrump) July 23, 2018
Mr Trump was responding to comments made by Mr Rouhani, who said that a war between the two countries would be the "mother of all wars" and that Mr Trump should not "play with the lion's tail because you will regret it eternally".
The war of words triggered fears of a disruption in oil supply from the region, sending Brent crude up 1% in afternoon trading to 73.730 US dollars a barrel.
The FTSE 100 closed the session 0.3% or 23 points lower at 7,655.79, with traders bracing themselves for a heavy week of corporate reporting.
Big-hitters including Sky, AstraZeneca, Royal Dutch Shell and GlaxoSmithKline, to name just a few, are all reporting this week, with a substantial number of updates falling on Thursday.
Connor Campbell, financial analyst at SpreadEx, said: "On the data front this week, it is pretty empty for the UK; the corporate calendar, on the other hand, is overstuffed, with nearly a fifth of the FTSE 100 reporting.
"It'll be interesting whether the index can substantially climb above 7,700 with a bit of help from its big-hitters, or if the earnings-mess prevents it from gathering any momentum."
On the continent, the Cac 40 in France was down 0.54% in the afternoon while Germany's Dax fell 0.13%.
Sterling was down 0.2% against the dollar at 1.310, and was flat against the euro at 1.119.
In markets, McColl's shares plunged after half-year profits halved, with the convenience store operator having suffered "one of the most challenging" trading periods to date following the Palmer & Harvey collapse.
The retailer saw pre-tax profits tumble to £2.3 million (€2.6m) over the 26 weeks to May 27, compared with £4.5 million (€5m) during the same period last year. Like-for-like sales fell 2.7%.
By the market close, McColl's shares were down 14% or 29p to 181p.
Hammerson announced the sale of two retail parks for £164 million (€184m) as it geared up for a raft of disposals meant to pacify shareholders during its half-year results.
The Birmingham Bullring owner will announce its half-year results on Tuesday, but said it has exchanged contracts for both the Imperial Retail Park in Bristol and the Fife Central Retail Park in Kirkcaldy. Shares fell 7.4p during trading to 526p.
Online estate agency Purplebricks has confirmed it is eyeing German and European firms for acquisition as it continues to expand its overseas footprint.
Chief executive Michael Bruce, who founded the firm with his brother Kenny in 2012, told the Press Association the group is hoping to replicate the success of a recent deal in Canada, which has propelled it into that market.
Shares closed 4.46% or 13.2p lower at 283p.
The biggest risers on the FTSE 100 were Ocado Group up 60p to 1,143p, WPP up 36p to 1,191p, DCC up 150p to 7,170p and Just Eat up 15.4p to 878.4p.
The biggest fallers on the FTSE 100 were Taylor Wimpey down 7p to 170.2p, Fresnillo down 33.5p to 1,089.5p, Barratt Developments down 15.8p to 516.6p and Persimmon down 71p to 2,433p.