European Markets Poised to Open Lower Amid Rising Oil Prices and Middle East Tensions

European stock markets are expected to open lower on Monday, with futures indicating declines across major indices. This trend reflects investor caution amid escalating oil prices and heightened geopolitical tensions in the Middle East.

As of early morning trading, Germany's DAX was down approximately 0.5%, the FTSE 100 fell around 0.3%, and France's CAC 40 also showed negative movement, according to IG data.

The subdued outlook follows losses in Asia, where shares mostly declined overnight due to concerns over soaring oil prices and the potential for further escalation in the US conflict with Iran.

On Wall Street, markets experienced steep losses on Friday, marking a fifth consecutive losing week—the longest such streak in nearly four years.

"US equity markets remained under sustained pressure, with the S&P 500 falling 2.1% for the week and the Nasdaq 100 sliding 3.2%. The Dow Jones held up comparatively better, declining 0.9%, owing to its lower technology weighting. Both the Nasdaq 100 and the Dow Jones have now officially entered correction territory after recording drawdowns of more than 10% below their respective peaks," IG market analyst Fabien Yip noted in a commentary.

In Asia-Pacific markets, Japan’s benchmark Nikkei 225 fell 4.5% in early trading, Australia’s S&P/ASX 200 dropped 1.2%, and South Korea’s Kospi slid 3.2%. Hong Kong’s Hang Seng declined 1.7%, while the Shanghai Composite edged 0.7% lower.

Investor concerns have intensified due to the risk of disrupted access to the Strait of Hormuz, a critical route for global oil shipments.

Benchmark Brent crude rose above $116 a barrel in early trading, marking an increase of more than 50% since the Iran conflict began on February 28. Prices were just over $70 a barrel when the conflict started. US benchmark crude also rose, reaching around $101 a barrel, reflecting continued volatility in global energy markets.

The surge follows recent developments, including US President Donald Trump's comments about potential military actions targeting Iran’s Kharg Island, the country's main oil terminal in the Persian Gulf. In an interview published early Monday by the Financial Times, Trump stated:

"Maybe we take Kharg Island, maybe we don’t. We have a lot of options."

He added:

"It would also mean we had to be there (on Kharg Island) for a while."

When asked about Iranian defenses on the island, he remarked:

"I don’t think they have any defense. We could take it very easily."

The US has already launched airstrikes targeting military positions on the island. In response, Iran has threatened to launch its own ground invasion of Gulf Arab countries and new attacks if US troops land on its territory.