Global oil prices climbed by more than four percent on Monday after renewed military tensions between the United States and Iran threatened a fragile ceasefire, while most major Asian stock markets retreated amid another wave of selling in technology shares.
The latest escalation in the Middle East came just days after both countries exchanged attacks, with diplomatic efforts still underway to secure a lasting agreement capable of guaranteeing safe passage through the strategically important Strait of Hormuz.
The renewed confrontation followed fresh US military strikes on Sunday after another outbreak of hostilities around the critical shipping route, with several Gulf nations allied to Washington reportedly coming under attack.
The development reignited fears of supply disruptions in the global energy market.
Both Brent crude and West Texas Intermediate (WTI) futures jumped as much as 4.5 percent during trading, reversing part of the decline recorded after last week’s announcement of a temporary truce.
The increase in oil prices has also revived concerns that higher energy costs could worsen global inflation, potentially forcing central banks to maintain tighter monetary policies or even resume interest rate increases.
The renewed conflict began after Iranian forces reportedly attacked a commercial vessel transiting the Strait of Hormuz early Sunday, forcing crew members to abandon the ship after it caught fire.
Following the incident, Iran’s Islamic Revolutionary Guard Corps announced that the strategic waterway would remain closed.
According to Iran’s state news agency IRNA, the Guards declared that “the Strait of Hormuz will be closed until further notice and until the end of American interventions in this region.”
However, the United States Central Command (CENTCOM) rejected the claim, insisting on social media platform X that the vital shipping route “was open to all vessels seeking to lawfully transit.”
Market analysts warned that the renewed tensions could quickly spiral into a wider geopolitical crisis.
“One can easily imagine the situation spiralling quite rapidly,” said Fawad Razaqzada, market analyst at Forex.com.
“Of course, rhetoric can soften. We’ve seen that movie before. But for now, traders are forced to assume the worst.”
Despite the latest jump in crude prices, analysts suggested that oil prices may not revisit the record highs recorded during the initial outbreak of the conflict earlier in the year.
IG market analyst Fabien Yip noted that crude prices had previously returned closer to pre-war levels because investors had anticipated a positive diplomatic outcome.
She explained that the renewed violence had exposed how uncertain that expectation had become.
“Oil’s return towards pre-war levels in June reflected markets pricing in a best-case outcome for the fragile US-Iran arrangement,” she wrote.
“The re-escalation exposes how fragile that assumption was.”
Yip added that while geopolitical tensions would likely keep crude prices elevated in the short term, structural market conditions could prevent another major rally.
“Near-term, the risk premium should keep prices supported, though a repeat of the earlier spike appears unlikely, as demand remains slow to recover while stranded-tanker releases and OPEC+ output quota expansion continue to add barrels to an already oversupplied outlook.”
Asian equity markets also reacted negatively to the renewed uncertainty, with South Korea suffering the biggest losses.
The benchmark Kospi Index plunged more than five percent as investors dumped technology stocks following weeks of volatility surrounding artificial intelligence-related companies.
Chipmaker SK hynix, one of South Korea’s largest listed firms, tumbled by about 10 percent, extending losses that have erased roughly one-third of its market value since reaching a record high last month.
The decline came despite the company’s recent successful New York market debut, where it surged nearly 13 percent after completing a record-breaking share sale worth approximately $26.5 billion.
Technology giant Samsung Electronics also recorded losses exceeding six percent.
Japan’s market also weakened, with semiconductor-related companies Advantest and Tokyo Electron each falling by more than one percent.
Elsewhere across Asia, markets in Shanghai, Singapore, Wellington and Jakarta closed lower, while Hong Kong, Taipei and Manila posted gains.
The US dollar strengthened as investors sought safer assets amid growing geopolitical uncertainty and speculation that the US Federal Reserve could be forced to raise interest rates later in the year if energy-driven inflation persists.
Market attention is now shifting toward the upcoming corporate earnings season, which investors hope will provide further insight into the outlook for the global semiconductor and artificial intelligence industries.
This week, investors are expected to closely monitor financial results from Taiwan Semiconductor Manufacturing Company (TSMC) and Dutch chip equipment manufacturer ASML.
Several major Wall Street financial institutions, including JPMorgan Chase, Bank of America and Goldman Sachs, are also scheduled to release their latest earnings reports.
Key Figures Around 0230 GMT
West Texas Intermediate: UP 4.3 per cent at $74.49 a barrel
Brent North Sea Crude: UP 4.2 per cent at $79.21 a barrel
Seoul – Kospi: DOWN 5.0 per cent at 7,104.14
Tokyo – Nikkei 225: DOWN 1.1 per cent at 67,786.86 (break)
Hong Kong – Hang Seng Index: UP 0.7 per cent at 24,334.14
Shanghai – Composite: DOWN 0.8 per cent at 3,963.83
Euro/dollar: DOWN at $1.1395 from $1.1415 on Friday
Pound/dollar: DOWN at $1.3380 from $1.3397
Dollar/yen: UP at 162.06 yen from 161.72 yen
Euro/pound: DOWN at 85.17 pence from 85.20 pence
New York – Dow: UP 0.3 per cent at 52,637.01 (close)
London – FTSE 100: UP 0.2 per cent at 10,497.29 (close)
