Global markets were unsettled on Monday as oil prices surged and stock markets declined, following a fresh escalation in the Middle East conflict.
Tensions intensified after Yemen’s Houthi rebels joined the ongoing Iran war, launching what they described as a barrage of missiles and drones at key targets in Israel.
The development has raised fears that the conflict could spread further across the region.
As the war entered its fifth week, concerns grew over the safety of major oil routes.
Saudi Arabia has already begun rerouting some of its oil shipments to avoid the Strait of Hormuz, a critical passage that handles about 20 percent of global oil and gas supplies and is now effectively shut by Iran.
The situation pushed oil prices higher, with Brent crude climbing close to $117 per barrel at one point before easing slightly. Both major oil benchmarks recorded gains of more than three percent during trading.
Investor sentiment was further shaken by comments from U.S. President Donald Trump, who suggested the possibility of targeting Iran’s key oil facility on Kharg Island.
He indicated that the U.S. has several military options, including potential ground operations, though officials say a full-scale invasion is unlikely for now.
Meanwhile, Iran accused the United States of secretly planning a ground attack, adding to already heightened tensions.
The rising oil prices and fears of a prolonged conflict have increased concerns about inflation and its impact on the global economy, putting additional pressure on stock markets.
Major Asian markets, including Tokyo and Seoul, recorded sharp losses, while Hong Kong, Sydney, and other regional markets also closed lower. In Europe, trading was mixed, and Wall Street had already suffered significant losses in the previous session.
Analysts say markets are now reacting not just to higher oil prices but also to the broader economic risks, including supply chain disruptions and rising costs in sectors such as energy, fertiliser, and manufacturing.
There are also growing concerns about shipping disruptions in the Bab al-Mandeb Strait, a key trade route linking the Red Sea and the Gulf of Aden. Any major disruption there could further push oil prices higher and deepen global economic uncertainty.
Despite a brief period of calm last week, after the U.S. delayed potential strikes on Iran’s energy facilities, investor confidence remains weak.
Experts warn that unless tensions ease soon, oil prices could continue to rise while stock markets face further declines.
