Oil prices leaped, and stock markets slumped worldwide following military strikes by the US and Israel on Iran.
Worries about disruptions to the flow of crude sent oil prices up greater than seven per cent Monday.
The S&P 500 fell 0.7 per cent as stocks of airlines and other U.S. businesses stand to see higher fuel bills soon. The Dow Jones Industrial Average dropped 490 points, and the Nasdaq composite fell 0.9 per cent.
The Toronto Stock Exchange was down on Monday by greater than 200 points, or 0.6 per cent as of publication.
Gold rose as investors searched for something safer to own. Treasury yields often fall when investors are nervous, but they rose as a substitute due to worries that higher oil prices will worsen inflation.
Military strikes on Iran rattled global markets on Monday with U.S. futures following markets in Europe and Asia lower. Energy prices rose sharply.
Futures for the S&P 500 and Dow Jones Industrial Average each sank about one per cent.
The value of a barrel of U.S. benchmark rose to roughly USD$72 per barrel, a price not seen because the U.S. summer driving season and the 12-day Israel-Iran war. Brent crude jumped nine per cent to just about $79.19 per barrel.
The spike in the price for a barrel of crude could show up in a matter of days or even weeks at gas pumps, with retailers forced to pay more for brand spanking new shipments of gasoline.
Travel sectors, from airlines and cruise operators to global hotel chains, tumbled.
Nevertheless it wasn’t just oil. Natural gas futures rose early six per cent and futures for fuel used for transportation in addition to industrial purposes, spiked greater than 14 per cent.
Germany’s DAX dropped 1.9 per cent to 24,817.42, while in Paris the CAC 40 lost 1.7 per cent to eight,435.80. Britain’s FTSE 100 slipped one per cent to 10,808.53.
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Shares fell in most Asian markets but they rose in Shanghai, where higher oil prices lifted some oil company stocks equivalent to CNOOC, China Petroleum & Chemical and PetroChina to the ten per cent limit.
The Shanghai Composite index climbed 0.5 per cent to 4,182.59, while in Hong Kong, the Hang Seng lost 2.1 per cent to 26,059.85.
Japan’s Nikkei 225 index initially fell greater than two per cent. It closed 1.4 per cent lower at 58,057.24. Offsetting other losses, shares in defense-related stocks including Mitsubishi Heavy Industries and IHI Corp. advanced.
In India, which could face disruptions to its access to grease as a result of the hostilities, the Sensex fell 1.3 per cent.
Taiwan’s benchmark lost 0.9 per cent and Singapore’s dropped 2.3 per cent. In Bangkok, a serious tourism destination for the Middle East, the SET fell 4 per cent.
Markets were closed in South Korea for a vacation.
Gold, a shelter for investment in times of uncertainty, rose 3.1 per cent to about $5,408.10 per ounce.
The U.S. dollar also gained, rising to 156.88 Japanese yen from 156.27 yen late Friday. The euro slipped to $1.1740 from $1.1762.
The conflict is more likely to disrupt oil supplies from Iran and elsewhere within the Middle East. Attacks throughout the region, including on two vessels travelling through the Strait of Hormuz, the narrow mouth of the Persian Gulf, have constrained oil exports to the remainder of the world.
“Roughly one-fifth of worldwide oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This shouldn’t be an obscure canal. It’s the aorta of the worldwide energy system,” Stephen Innes of SPI Asset Management said in a commentary.
Prolonged interruptions to grease flows through the Middle East would have “huge implications for oil and LNG and each market in all places if it occurs. Energy is an input to ALL production,” RaboResearch Global Economics & Markets said in a report.
Iran exports roughly 1.6 million barrels of oil a day, mostly to China. It might have to look elsewhere for supply if Iran’s exports are disrupted, one other factor that might increase energy prices.
The dimensions of China’s strategic oil reserves is a state secret. But a recent report by John Kemp of Base Research estimated them at 1.1 billion to 1.2 billion barrels –- such as around 100 days or simply over three months of imports.
The conflict’s impact on markets was muted somewhat since the attacks were anticipated, with a large buildup of U.S. forces within the Middle East. So traders had adjusted their positions to take that risk under consideration.
The conflict has shifted attention, for now, away from issues surrounding artificial intelligence which have dominated markets in recent months.
Treasury yields fell within the bond market as investors sought safer places for his or her money.
“When markets are fragile, they don’t need a knockout blow. They simply need one other weight on the bar,” Innes said.
Also hurting the broad market was a report Friday showing that inflation on the U.S. wholesale level was at 2.9 per cent last month, much higher than the 1.6 per cent that economists expected.
That would pressure the Federal Reserve to carry off longer on its cuts to rates of interest. Lower rates would give the economy and costs for investments a lift, but they risk worsening inflation.
© 2026 The Canadian Press