Oil prices spiked and Asian markets fell on Monday following US air strikes on Iranian nuclear facilities, raising concerns about potential disruptions to global energy markets.

Brent and West Texas Intermediate (WTI) crude oil futures initially jumped over four percent, reaching their highest levels since January, before settling at gains of approximately 2.1 percent each. Brent crude reached $75.43 per barrel, while WTI hit $78.64.

The attacks, which prompted Iran to threaten retaliation against US bases in the Middle East, fueled fears of an escalating conflict in the region. Economists at MUFG warned of significant uncertainty and the potential for a $10 per barrel increase in oil prices, which they noted would negatively impact many Asian economies, heavily reliant on energy imports. Asian markets reflected this concern, with Tokyo’s Nikkei index down 0.6 percent, Hong Kong’s Hang Seng down 0.4 percent, and Seoul’s KOSPI down 0.7 percent.

While US Defense Secretary Pete Hegseth described the strikes as devastating to Iran’s nuclear program, the extent of the damage remains unclear. Analysts noted that Iran could inflict economic damage on the world by creating uncertainty around its ability to disrupt the Strait of Hormuz, a key shipping route for oil, even without resorting to closure.

The escalating situation and the potential for further conflict continue to create volatility in global oil markets and broader financial markets.