Global stock markets plunged Monday and oil prices surged as much as 30%, briefly approaching $120 a barrel, amid escalating concerns over the ongoing conflict in the Middle East, now entering its second week with no ceasefire in sight. The sharp moves reflect investor anxieties about the potential for broader economic disruption.
Asian markets extended last week’s losses as investors braced for the potential economic fallout from the war.
The Seoul Stock Exchange, which had seen strong performance earlier this year driven by its technology companies, closed down 5.96% on Monday. The Tokyo market finished with a 5.2% decline.
European bourses opened sharply lower. In early trading, Paris was down 2.59%, Frankfurt 2.47%, London 1.57%, Madrid 2.87%, and Milan 2.71%.
Significant declines were also recorded in Hong Kong, Shanghai, Taipei, Sydney, Singapore, Manila, and Wellington.
Futures for the three major Wall Street indices had fallen more than 2% last week, while the U.S. Dollar gained ground as a safe-haven asset.
The most pronounced impact of the conflict, however, was felt in the oil market. As of 6:30 GMT, West Texas Intermediate (WTI) crude, the main U.S. Benchmark, was up 15.51% at $104.96 a barrel. Earlier, it had spiked 30% to $119.48 a barrel.
Brent crude, the European benchmark, rose 17.42% to $108.82 a barrel, after exceeding $119.
Natural gas prices on the Dutch TTF futures exchange, a European reference point, also opened with a 30% increase to €69.50 (approximately $80).
Recent reports indicate attacks on oil fields in southern Iraq and the autonomous Kurdish region of northern Iraq, leading to production cuts. The United Arab Emirates and Kuwait also reduced output amid reported Iranian attacks on their territories.
The G7 nations are considering a coordinated release from their strategic petroleum reserves to curb rising prices. A French government source confirmed the option will be discussed in a videoconference of finance ministers. The International Energy Agency requires its members to maintain reserves equivalent to 90 days of imports.
– “Tax on the global economy” –
Traffic in the Strait of Hormuz, through which approximately one-fifth of the world’s oil and gas supply passes, has been suspended since the outbreak of the war on February 28.
With expectations that energy prices will remain elevated for an extended period, fears of a wave of inflation impacting the global economy are growing.
U.S. President Donald Trump downplayed the increase in crude oil prices, emphasizing the importance of eliminating “the nuclear threat from Iran.”
“The short-term increase in oil prices, which will fall rapidly when the destruction of the nuclear threat from Iran is completed, is a very small price to pay for the safety and peace of the United States and the world,” Trump wrote on his Truth Social platform. “ONLY FOOLS WOULD THINK OTHERWISE!” he added.
Despite Trump’s comments, analysts warned of a severe impact on the global economy.
“The deepest shock is spreading through the production chain,” said Stephen Innes of SPI Asset Management.
According to the expert, “oil above $100 is not just a commodity rally. It becomes a tax on the global economy.”
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