Crude oil prices rose sharply in early trading after Israel carried out airstrikes on Monday targeting central and western Iran in retaliation for earlier missile attacks.
Iranian state television reported that explosions were heard in Isfahan, Tabriz, and Tehran, though no further details were immediately provided.
Diplomatic efforts remain unsettled, as American and Iranian negotiators had reached a tentative understanding last week to extend a ceasefire.
However, the agreement has yet to be finalized, and the latest escalation is further complicating attempts to de-escalate the conflict.
In energy markets, Brent crude climbed $3.50 to $96.59 per barrel, while U.S. benchmark West Texas Intermediate also advanced, rising $3.48 to $94.02 per barrel at the time of reporting.
Equity markets in Asia declined broadly. South Korea’s benchmark KOSPI dropped 6.8% to 7,605.42, dragged lower as Samsung Electronics fell 7% and SK Hynix slipped 3.3%. Taiwan’s TAIEX declined 3.8%.
In Hong Kong, the Hang Seng Index fell 1.3% to 24,631.64, while China’s Shanghai Composite Index lost 1.1% to 3,984.75. Japan’s Nikkei 225 slid 4.2% to 63,804.77. Separately, Japanese authorities revised first-quarter annualized economic growth downward to 1.8%, compared with a previous estimate of 2.1%.
Markets in Australia were closed for the King’s Birthday public holiday.
In the United States, Wall Street ended the previous week lower. The S&P 500 fell 2.6% to 7,383.74 after a strong jobs report increased expectations that the Federal Reserve may move toward raising interest rates later this year. It marked the largest one-day decline since October 10, when tariff threats on Chinese imports rattled markets. The Dow Jones Industrial Average declined 1.4% to 50,866.78, while the NASDAQ Composite dropped 4.2% to 25,709.43.
Bond markets also reacted strongly after the U.S. Labor Department reported an unexpected 172,000 job additions in May, signaling continued resilience in employment despite inflationary pressure. The yield on the 10-year Treasury rose to 4.54% from 4.50% before the data release, while the 2-year yield, closely tied to Federal Reserve policy expectations, increased to 4.16% from 4.04%.
The Federal Reserve has maintained steady interest rates as it assesses the broader effects of persistent inflation, which has been compounded by tariff pressures. Meanwhile, ongoing conflict involving the United States and Iran has disrupted crude oil flows through the Strait of Hormuz, further tightening global energy supply concerns.
In currency markets early Monday, the U.S. dollar edged higher to 160.35 Japanese yen from 160.25 yen. The euro traded at $1.1530, slightly stronger compared with $1.1515 in the previous session.
