European Stocks Tumble as Iran-Strait of Hormuz Crisis Rattles Global Markets

European equity markets opened sharply lower on Monday as investors reacted to escalating tensions between the United States and Iran over the Strait of Hormuz. The pan-European Stoxx 600 dropped 1.3%, Germany's Dax slid 2.0%, France's CAC 40 lost 1.6%, and the UK's FTSE 100 fell 1.3%, reflecting broad risk-off sentiment across the region.

The sell-off followed a weak session in Asia, where markets also declined significantly. Asian economies, many of which depend heavily on Gulf energy imports, face heightened exposure to any prolonged disruption in oil and gas flows.

At the center of the turmoil is the Strait of Hormuz, a critical shipping corridor through which approximately one-fifth of global oil supply travels. Commercial vessels have largely avoided the waterway amid fears of Iranian targeting, while insurers have pulled back from covering Gulf-bound shipments. President Trump issued a stark warning to Tehran, threatening strikes on Iranian power infrastructure if the strait was not reopened by Monday night. Iran dismissed the ultimatum, vowing the passage would stay closed if its energy assets were attacked.

Brent crude surged 2.9% to $109.52 per barrel, a dramatic rise from the roughly $70 level seen before the conflict erupted in late February. Natural gas prices in Europe also spiked after Iranian strikes hit a major Qatari gas production facility, tightening supply for a continent that relies heavily on Gulf LNG imports.

The European Central Bank has raised concerns that a prolonged conflict could reignite inflation across the eurozone, just as price pressures had appeared under control. Officials signaled they remain prepared to adjust interest rates if necessary, fueling speculation about potential rate hikes in the coming months.

With no diplomatic resolution in sight, global markets remain on edge as the geopolitical and economic stakes continue to climb.