World shares tumble as Iran war pushes crude prices over $110/bbl

World shares tumbled on Monday, with Japan’s benchmark Nikkei 225 index plunging more than 5 per cent, after oil prices spiked at nearly $120 a barrel, casting a shadow over economies heavily dependent on imports of oil and gas from the Middle East.

The futures for the S&P 500, Nasdaq composite index and the Dow Jones Industrial Average were trading more than 1 per cent lower after dropping more than 2 per cent late Sunday.

A Chinese special envoy to the Middle East, Zhai Jun, called for an end to the attacks and said strikes on non-military targets and civilians should be condemned. Meanwhile, South Korean President Lee Jae Myung warned against hoarding, panic buying and collusion between refiners and gas stations.

“Please respond proactively to the growing volatility in the financial and foreign exchange markets, which are the lifeblood of our economy,” Lee said.

He said the government would cap fuel prices. Oil prices rocketed higher after both sides in the war struck new targets over the weekend, including civilian ones. Bahrain accused Iran of hitting one of the desalination plants that are crucial for drinking water in Gulf countries. Its national oil company declared force majeure after the country’s sole oil refinery was attacked. Israel struck oil depots in Tehran, sending up thick smoke and causing environmental alerts.

In early European trading, Germany’s DAX dropped 2.6 per cent to 22,983.67 and the CAC 40 in Paris lost 2.7 per cent to 7,779.46. Britain’s FTSE 100 lost 1.9 per cent to 10,089.05. The only market to show gains was in oil exporter Norway, where its benchmark edged 0.1 per cent higher. During Asian trading, Japan’s Nikkei 225 plunged more than 7 per cent early in the day but regained some of those losses to close 5.2 per cent lower at 52,728.72.

South Korea’s Kospi sank 6 per cent to 5,251.87. Chinese markets, which tend to be less affected by global trends, saw more moderate losses. Hong Kong’s Hang Seng fell 1.4 per cent to 25,408.46 and the Shanghai Composite index lost 0.7 per cent to 4,096.60. Taiwan’s benchmark dived 4.4 per cent and India’s Sensex lost 2.3 per cent.

Other regional markets also swooned. As of 0900 GMT, the price for a barrel of Brent crude was $106.61 a barrel. US benchmark crude rose to $103.20. Both were about 15 per cent above their closing prices Friday. Crude prices have spiked to their highest levels in at least 14 years as the war, now in its second week, ensnares countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.

They last rose above $100 shortly after Russia invaded Ukraine in 2022. “The market woke up to the sound every macro trader dreads. The oil alarm bell. And this time it was not a polite chime. It was a fire siren,” Stephen Innes of SPI Asset Management said in a commentary.

Surging oil and gas prices, if they persist, could ripple across the globe, further complicating matters for countries still adjusting to higher tariffs on exports to the United States under President Donald Trump.