Oil prices surged close to 5% by Monday midday after Israel and Iran exchanged strikes, testing a fragile truce and threatening hopes for a deal to end the Middle East crisis, while global stocks, led by tech, slid.
The contract for August jumped 5.1% to $97.83 a barrel, while West Texas Intermediate (WTI) climbed 4.8% to hit $94.85.
Stocks suffered a blow as South Korea's Kospi led the global retreat, plunging 8.3% on heavy selling of tech shares and extending losses that on Friday gave the S&P 500 its biggest single-day drop in months.
The fresh reaction of markets came as Israel said on Monday it hit a petrochemical plant in Iran's southwest, along with strikes elsewhere on military targets. That's despite U.S. President Donald Trump reportedly telling Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
In the first hit on an energy site inside Iran since the April 8 cease-fire, Israel said it struck targets at the Mahshahr petrochemical complex. A provincial official told Iran's semi-official Fars news agency that parts of the plant were damaged.
Hopes are now eroding for an imminent end to the wider war and a restart to crude flows through the Strait of Hormuz, through which roughly a fifth of the world’s oil and liquefied natural gas (LNG) used to transit.
Monday's gains erased Friday's losses, when prices fell on hopes of a de-escalation in the U.S.-Iran conflict. Oil prices have climbed just under 60% since the start of the war in late February, but remain below highs marked in March when Brent reached nearly $120 per barrel.
On Sunday, Iran fired a salvo of missiles at Israeli targets in retaliation for the strikes on Lebanon. Even so, Trump insisted that an agreement to end the wider war remains well within reach.
Iran, however, has made a cease-fire with Lebanon a condition for a peace deal with Washington.
In early European share trading, France's CAC 40 fell 0.7% to 8,161.42, while the German DAX dipped 0.8% to 24,552.77. Britain's FTSE 100 shed 0.4% to 10,331.24.
During Asia's day, the Kospi in Seoul slipped 8.3% to 7,484.41 as Samsung Electronics, the country's biggest company, dropped 10.2%. SK Hynix declined 7.7%.
Japan's benchmark Nikkei 225 dropped 3.9% to finish at 64,024.60. The Japanese government revised the annualized economic growth rate to 1.8% for the first quarter this year, down from an earlier estimate of 2.1%.
Elsewhere in Asia, Taiwan's Taiex lost 3.5%, and the Hang Seng in Hong Kong lost 1.3% to 24,642.33. The Shanghai Composite shed 1.7% to 3,959.34.
Markets were closed in Australia for the King's Birthday, a holiday.
Friday marked the biggest one-day drop for Wall Street since Oct. 10, when the Trump administration threatened to impose a 100% tariff on imported goods from China.
The S&P 500 sank 2.6% after a strong jobs report boosted expectations about the Federal Reserve raising interest rates this year, further darkening sentiment already dimmed by worries over a possible end to the rally in tech shares driven by the boom in investment in artificial intelligence.
