LONDON: Stock markets slumped as energy prices soared on Monday on supply disruptions from the Middle East war drove volatility and fanned inflation fears.
Oil prices rocketed above $100 a barrel for the first time since Russia’s invasion of Ukraine in 2022, as Iran carried out retaliatory strikes against crude-producing Gulf nations.
US President Donald Trump said at the weekend that the price spike was a “small price to pay” to eliminate Iran’s nuclear threat, as the war showed no signs of easing.
Iran marked the appointment of Ayatollah Mojtaba Khamenei to replace his father as its supreme leader with a new barrage of missiles against Israel and the Gulf states at the start of the week.
After spiking around 30 per cent during Asian trading, international benchmark Brent and the main US oil contract WTI both pared gains to stand up around 10pc at around $100 per barrel as trading got underway in New York. Even following Russia’s 2022 invasion of Ukraine, which oil touched $130.50 per barrel, the jump in prices wasn’t as vertiginous.
“Stocks are a sea of red today,” said Kathleen Brooks, research director at trading group XTB.
Stocks in Europe and on Wall Street clawed back some of their earlier losses as oil prices gave up much of their gains as the Group of Seven industrialised nations prepared to discuss tapping emergency reserves to ease the supply strain.
But G7 finance ministers later decided against releasing oil from strategic stocks for the moment, the markets took the decision in stride.
Markets are worried that a spike in energy prices would trigger inflation and slow growth.
Brent is currently up around 41pc from right before the war and WTI around 50pc. They are up around 68 and 75pc respectively since the start of the year.
“The surge higher for the price of oil is significantly increasing stagflation risks for the global economy and could trigger a deeper sell-off in global equity markets,” said analyst Lee Hardman at Mitsubishi UFJ financial group Stagflation refers to a period of high inflation and economic stagnation.
In Asia, Seoul, one of region’s best performers this year thanks to a tech rally, closed down 6pc, while Tokyo shed more than 5pc and Taipei fell over 4pc.
Published in Dawn, March 10th, 2026
