Global oil prices climbed above $100 a barrel on Monday while most Asian stock markets declined as the conflict involving Iran entered its third week, with both sides showing little sign of easing tensions.
Crude prices surged early in trading after Donald Trump said over the weekend that US forces had struck military targets on Kharg Island, a key export hub in the Gulf responsible for handling the majority of Iran’s oil shipments.
Trump also warned that further strikes could target energy infrastructure if Tehran interferes with shipping through the strategically important Strait of Hormuz. The waterway, a critical route for global oil supplies, has effectively been closed since US and Israeli operations began on 28 February.
However, Iran’s Fars News Agency later reported that no oil infrastructure had been damaged in the strikes.
Trump urged several major economies, including China, France, Japan, South Korea and the United Kingdom, to deploy naval vessels to help keep the Strait of Hormuz open.
In a social media post, he said countries that rely on oil transported through the waterway should take responsibility for securing it, with the United States offering support.
However, Japan said it was not currently considering a maritime security operation, while Australia announced it would not send naval ships to the region.
Trump also claimed that Tehran was seeking a deal to end the conflict but said the United States was not prepared to negotiate under current conditions.
Iran’s Foreign Minister Abbas Araghchi dismissed the claim, saying Tehran had no interest in talks with Washington.
“We don’t see any reason to talk with the Americans because we were already in negotiations when they decided to attack us,” Araghchi said in an interview with CBS News. He added that Iran had neither requested a ceasefire nor sought negotiations but was willing to discuss safe passage for vessels with other countries.
Hostilities continued on Monday, with Saudi Arabia reporting that it had intercepted more than 60 drones since midnight. Flights were also temporarily suspended at Dubai International Airport following a drone-related incident that caused a nearby fire.
Araghchi also condemned Israeli strikes on fuel depots in Tehran, describing them as “ecocide” because of the potential long-term environmental and health impacts.
Oil markets reacted sharply to the uncertainty. Brent Crude rose about three percent to as high as $106.50 per barrel before easing to around $104, while West Texas Intermediate climbed more than two percent to trade above $100.
The increase came as International Energy Agency member states agreed to release a record 400 million barrels from strategic reserves to help stabilise prices. Japan has already begun releasing part of its reserves, with other regions expected to follow.
Concerns about a potential energy crisis weighed on global equity markets. Most Asian markets, including those in Tokyo, Shanghai, Sydney, Mumbai and Bangkok, ended lower, although Hong Kong, Seoul and Singapore recorded gains.
European markets, including London’s FTSE 100, opened slightly higher.
Analysts say the outlook for global markets will largely depend on when shipping through the Strait of Hormuz resumes.
Michael Brown of Pepperstone said the longer the strait remains blocked, the tighter global commodity supplies will become, pushing prices higher and potentially increasing inflationary pressure.
Investors are also watching policy meetings this week at several major central banks, including the Federal Reserve, Bank of England and the European Central Bank, for signals on how the conflict could affect the global economic outlook.