Global financial markets tumbled on Monday as oil prices surged nearly 6% following a sharp escalation in tensions involving Iran, which reportedly struck several ships in the Strait of Hormuz and caused a fire at an oil facility in the United Arab Emirates.
Brent crude rose $6.27 (5.8%) to $114.44 per barrel, while West Texas Intermediate gained $4.48 (4.4%) to $106.42, marking one of the strongest single-day increases in recent weeks.
The spike followed a weekend statement by US President Donald Trump, who pledged that the US Navy would ensure the Strait of Hormuz remains open, escalating already heightened geopolitical tensions in the region.
The Strait of Hormuz, a critical global energy chokepoint through which nearly one-fifth of the world’s oil and gas shipments pass, has faced sustained disruption for two months amid ongoing regional hostilities.
Equity markets reacted negatively to the developments. In the United States, the Dow Jones Industrial Average fell 1.13%, the S&P 500 declined 0.41%, and the Nasdaq Composite slipped 0.19%.
Analysts warned that prolonged high oil prices could intensify inflationary pressures and complicate fiscal and monetary policy decisions globally.
“The longer oil prices stay above $100 a barrel, the more the fiscal stimulus from the 2025 tax cuts shifts from being a boost to acting as a shock absorber,” said Brock Weimer, investment strategy analyst at Edward Jones.
European markets also weakened, with the STOXX 600 down 0.99%, pressured in part by tariff concerns after Trump signaled higher duties on European automotive imports. German 10-year bond yields rose to 3.08%.
In currency markets, the Japanese yen showed volatility amid speculation of intervention, while the US dollar strengthened against major currencies. The euro and British pound both declined slightly against the dollar.
The broader dollar index rose 0.28% to 98.44, reflecting safe-haven demand amid global uncertainty.
Gold prices also fell 2.13% to $4,515.27 per ounce as investors shifted positions amid market turbulence.