European stock markets opened the week sharply lower on Monday as surging oil prices and escalating tensions in the Middle East weighed on investor sentiment.
By 04:05 ET (08:05 GMT), Germany’s DAX index had fallen 2.1%, France’s CAC 40 declined 2.4%, and the UK’s FTSE 100 dropped 1.6%, reflecting broad losses across major European equities.
The sharp decline in stocks followed a significant surge in crude oil prices as the conflict in the Middle East intensified over the weekend. The United States and Israel reportedly launched new waves of airstrikes across Iran, targeting several sites including oil storage facilities.
At the same time, major oil producers in the region — including Kuwait, Iran, and the United Arab Emirates — reduced output as tanker traffic through the Strait of Hormuz slowed dramatically. The narrow waterway, which typically handles around 20% of global oil shipments, has seen severe disruptions since the conflict began roughly a week ago.
As a result, oil prices surged above $110 per barrel, reaching levels last seen during the early stages of the Russia-Ukraine war in 2022. Analysts warn that if the conflict continues to escalate, crude prices could potentially approach the $150 per barrel level.
Brent crude futures jumped about 15% to $106.55 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed roughly 12% to $101.92 per barrel.
Oil prices had already been rising last week, although the increase was initially moderate as investors expected the conflict to remain relatively short-lived and global oil supply to remain sufficient.
However, geopolitical risks intensified after Iran named Mojtaba Khamenei, the son of the late Ayatollah Ali Khamenei, as the country’s new Supreme Leader on Sunday. The appointment is widely interpreted as a signal that Iran’s leadership intends to maintain a hardline stance in the ongoing conflict.
U.S. President Donald Trump criticized the leadership change, calling Mojtaba Khamenei an “unacceptable” successor, which could further heighten tensions in the region.
Trump also addressed the sharp rise in oil prices, stating that temporary increases in energy costs were a “small price to pay” if they contribute to eliminating Iran’s nuclear threat. The jump in crude prices has already begun to affect gasoline prices at U.S. fuel stations.
Beyond geopolitical developments, investors are also closely monitoring economic indicators for signs of slowing global growth.
Corporate earnings news was relatively quiet in Europe on Monday, following what has generally been a solid earnings season for many companies.
Economic data from Germany added to market concerns. German factory orders fell sharply by 11.1% in January, significantly worse than expectations for a 4.2% decline and reversing the previous month’s 6.4% increase.
German industrial production also weakened, declining 0.5% in January after a 1.0% drop in December.
Global economic concerns were further heightened late last week after new data showed the U.S. economy unexpectedly lost jobs in February. The unemployment rate also rose to 4.4%, suggesting potential weakness in the labor market.
This development could complicate the Federal Reserve’s policy outlook, particularly as rising oil prices add new inflationary pressures to the global economy.
