Oil prices surged Monday as the conflict in the Middle East intensified, prompting investors to seek safety in the U.S. dollar, gold, and bonds.
Brent crude jumped 7.5% to $78.34 a barrel, and U.S. crude climbed 7.3% to $71.88. Gold prices rose 1.5% to $5,358 an ounce.
Military actions involving the U.S., Israel, and Iran risk wider regional escalation. The Strait of Hormuz, a critical artery for global oil trade, has seen a de facto halt in traffic, with tankers rerouted or delayed due to attack fears and insurance concerns.
Analysts warn that a sustained oil price spike could reignite global inflation and depress economic demand. While OPEC+ announced a modest production increase, logistical challenges remain.
This geopolitical shock is impacting global markets. Asian stocks outside Japan fell, while European and U.S. futures also indicated significant declines. The U.S. dollar strengthened against the euro and yen.
Bond markets saw yields fall as investors retreated from riskier assets. This economic uncertainty comes as the U.S. prepares to release key economic data this week, including manufacturing surveys, retail sales, and the crucial payrolls report, which could influence Federal Reserve rate cut expectations.