Fresh military action between the United States and Iran pushed oil prices higher on Monday, while equity markets weakened across Asia and Europe as investors reacted to growing uncertainty surrounding shipping through the Strait of Hormuz.
The renewed escalation has renewed concerns over energy supplies, inflation, and financial markets. According to reports, the latest exchanges of strikes have also raised fresh questions about the future of the interim US-Iran agreement reached last month, which had aimed to restore commercial navigation through the strategic waterway.
The market reaction was immediate. Brent crude climbed sharply in early trading, government bond yields increased, and airline and technology shares came under pressure as investors reassessed geopolitical risks. The Strait of Hormuz remains a focal point because roughly one-fifth of the world’s oil supply normally passes through the channel.
Oil Prices Climb as Shipping through the Strait of Hormuz Comes under Pressure
Brent crude rose 3.3% in early trading to $78.50 a barrel, while US crude gained 3.4% to reach $73.83 a barrel, according to reports. Later in the trading session, The Guardian reported that Brent had climbed 4.7% to $79.59 a barrel as renewed hostilities continued to influence energy markets.
The latest increase followed another round of US strikes against Iran and additional Iranian military action involving Qatar and the United Arab Emirates. According to reports,Tehran also declared the Strait of Hormuz closed after stating that a vessel had traveled along an unapproved route and had been struck. US President Donald Trump said on Sunday that the waterway remained open to commercial shipping.
Shipping activity has already slowed. According to Reuters, ship-tracking data from Kpler showed that only six vessels transited the strait on Sunday, the lowest daily total in five weeks. The Guardian likewise cited Kpler’s figures, noting that the decline reflected increasing uncertainty surrounding Gulf exports.
The recent developments have also cast doubt on the interim agreement signed between Washington and Tehran last month. The arrangement had sought to reopen the strait and establish a further 60 days of negotiations aimed at ending the conflict. The International Energy Agency (IEA), said global oil supply increased by 4.1 million barrels per day in June but remained 9.4 million barrels per day below pre-war levels.
Stock Markets Retreat as Investors Weigh Inflation and Interest Rate Risks
Financial markets responded broadly to the higher oil prices and geopolitical tensions. According to reports, Japan’s Nikkei fell 1.0%, while MSCI’s broad Asia-Pacific index outside Japan slipped 0.2%. South Korea’s market also remained under pressure after significant losses during the previous week.
European markets also weakened. According to The Guardian, the Stoxx Europe 600 index declined 0.2%, while airline stocks including Ryanair, Air France, International Consolidated Airlines, Wizz Air, Finnair, and Lufthansa all posted losses. In contrast, gains in BP and Shell helped keep the FTSE 100 broadly unchanged.
Technology shares were affected as well. According to reports,Nasdaq futures declined 0.5%, while The Guardian reported that South Korean chipmakers SK Hynix and Samsung Electronics experienced steep share price declines during Monday’s trading.
The rise in oil prices also influenced expectations for monetary policy. According to reports, Treasury yields moved higher and investors increased the perceived likelihood of further Federal Reserve interest rate increases before the end of the year. Gold prices also declined as yields increased, falling by 1.1% in early trading before extending losses to 1.5% as markets weighed the inflationary implications of higher energy prices.
