Global commodity markets were jolted when they reopened on Monday, as the war on Iran continued to escalate over the weekend.
Israel struck over 30 oil depots in Iran on Saturday, including in Tehran and Karaj.
The strikes on depots went far beyond what the US expected when Israel notified it in advance, according to a report in Axios.
Iran threatened to attack oil facilities in neighbouring countries in response.
It launched a fresh wave of attacks on the Gulf on Sunday, with attacks reported in the UAE, Qatar, Bahrain and Kuwait.
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Middle East Eye takes a look at how the war is impacting the markets.
Crude oil soars above $100
Oil prices jumped to the highest levels since Russia’s invasion of Ukraine in 2022, before falling back slightly.
Brent crude prices soared as high as $119 per barrel, while US West Texas Intermediate (WTI) also rose to $119.48 a barrel.
The price of Brent crude later dropped to around $105, as the Financial Times reported that G7 finance ministers would meet to discuss the potential joint release of petroleum reserves coordinated by the International Energy Agency.
In a post on Truth Social, US President Donald Trump insisted the spike would not last.
“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace,” he wrote.
“ONLY FOOLS WOULD THINK DIFFERENTLY!” he added.
Qatar, the world’s second largest producer of liquified natural gas, has been forced to close the Ras Laffan plant due to air strikes in the vicinity.
Kuwait, Iraq, the UAE and Saudi Arabia have all reduced oil production, partly due to Iran blocking the Strait of Hormuz.
These countries export oil to Asia via the narrow maritime channel between Iran and Oman.
Strait of Hormuz closure hits Asian markets
Asian market indices took the brunt of investor anxiety following the outbreak of war.
As markets opened on Monday morning, Japan’s Nikkei 225 dropped by around 5.2 percent, while South Korea’s KOSPI slumped 6.2 percent over the weekend.
There were smaller drops elsewhere: Hong Kong’s Hang Seng Index was down by 1.8 percent, while India’s NIFTY 50 fell by around 2.5 percent.
South Korea and Japan’s market indices have plummeted since the war began nine days ago. The KOSPI is down 16 percent, while the Nikkei 225 has fallen around 10 percent.
Australia’s ASX 200 has fallen 6 percent over that period.
The drop in Asian equity markets is linked to the global energy shock caused by the war, but also specifically the reliance on the Strait of Hormuz for oil exports to Asia.
South Korea receives around 70 percent of its crude oil from the Middle East, while Japan imports around 90 percent.
UK and EU markets dip
Markets also tumbled in Europe on Monday.
London’s FTSE 100 fell by 1.7 percent in early trading, reaching its lowest level since mid-January.
Meanwhile, both Germany’s DAX and the CAC in Paris dipped by around 2.4 percent.
The pan-European Stoxx 600 fell by 2 percent.
In the currency markets, the pound was 0.8 percent down against the US dollar, at $1.331. It was the biggest daily fall in over a month.
UK Prime Minister Keir Starmer said supporting British people with the cost of living and energy bills would be at the top of his mind.
UK government bonds tumbled for a third day too, as investors weighed up the impact of the war on the British economy.
US dollar rallies
The US dollar index, which measures the currency against a basket of six major peers, climbed to 99.57 – its highest in three months.
This was partly sparked by traders revising inflation expectations, with the war meaning the Federal Reserve could delay a cut to interest rates.
Like other markets around the world, US stocks dropped on Monday – though less severely than in Asia and Europe.
The S&P 500 fell by 1.1 percent early on Monday, while Nasdaq 100 fell 1 percent.
Markets reacted to Iran naming Mojtaba Khamenei, the son of slain Ayatollah Ali Khamenei, as its new supreme leader, and keeping up attacks on countries in the region.
They saw that, coupled with Trump’s recent statements, as signs of a prolonged war.
Gold falls while agricultural markets rise
Gold fell 2 percent, amid concerns over the war driving up inflation.
Spot silver was down 0.3 percent on Monday, while platinum lost 1 percent and palladium fell 1.3 percent.
Meanwhile, aluminium soared to its highest in four years due to supply concerns amid the war.
Benchmark three-month aluminium on the London Metal Exchange hit its highest since March 2022 at $3,544 per ton.
In agricultural markets, Malaysian palm oil rose 9 percent and Chicago soybean oil climbed to its highest since 2022 – both driven by the crude oil hike.
Wheat also rose to its highest since June 2024, while corn prices hit a 10-month high.
