Morning brief: Oil surges as Iran conflict spreads; Bitcoin slips

Global markets opened the week under pressure as escalating military confrontation involving Iran rippled across commodities, equities, currencies, and digital assets.

A sharp jump in oil prices unsettled risk appetite, while safe-haven demand lifted gold and supported the dollar.

Investors are now weighing geopolitical risks alongside economic data and infrastructure disruptions, including a cloud-computing outage in the United Arab Emirates.

Asian markets slide as oil shock rattles risk appetite

Financial markets reacted immediately to the prospect of a prolonged conflict in the Middle East.

Oil prices surged and equity markets weakened as investors assessed inflation risks and the potential hit to global growth.

Brent crude rose 6.4% to $77.60 per barrel after briefly topping $82, while US crude climbed 6.3% to $71.27.

Gold gained 1.57% to about $5,360 an ounce as investors sought safety.

The geopolitical escalation raised concerns about supply routes, particularly the Strait of Hormuz, through which roughly one-fifth of global seaborne oil and 20% of liquefied natural gas flows.

Tankers were seen accumulating on both sides of the strait as operators assessed security and insurance risks.

Jorge Leon, head of geopolitical analysis at Rystad Energy, warned: "The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day (bpd) of crude oil from reaching markets," and added, "Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil."

Asian equities declined broadly.

Japan’s Nikkei fell about 1.66%, MSCI’s Asia-Pacific index dropped 1.4%, while China's CSI 300 gained 0.41%.

Airlines were particularly weak due to rising fuel costs.

Global equity futures also moved lower, with S&P 500 and Nasdaq futures each down roughly 0.8%.

The oil shock also strengthened the dollar, reflecting the US position as a net energy exporter.

Treasury yields held near 3.97%.

Iran conflict escalates, raising fears of prolonged regional disruption

The military situation continued to deteriorate across the region.

US and Israeli strikes on Iran persisted while Tehran responded with missile barrages.

President Donald Trump indicated operations would continue and suggested the conflict could last several weeks.

Iran’s national security leadership rejected diplomatic overtures.

Ali Larijani said Iran “will not negotiate with the United States.” He also wrote that Trump’s “delusional fantasies” have plunged the West Asia into chaos.

Regional tensions widened as Hezbollah launched rockets and drones at Israel following the death of Ayatollah Ali Khamenei, while Israel struck militant targets in Lebanon.

Residents in several areas were warned to evacuate.

The economic implications could be significant.

Analysts warned that a prolonged spike in oil prices risks reigniting global inflation and weakening demand.

Alan Gelder of Wood Mackenzie compared the situation to the 1970s oil crisis, saying: "The nearest historical analogue in our view is the Middle East oil embargo of the 1970s, which increased oil prices by 300% to around $12/bbl in 1974."

Bitcoin retreats as higher oil prices threaten rate-cut outlook

Digital assets traded weaker as traditional markets priced in geopolitical risk.

Bitcoin fell to about $66,702, down roughly 1.1% in 24 hours after briefly rebounding to $68,000.

Ether dropped 2.5%, Solana fell 4.1%, and XRP declined 3.6%.

The link to macro conditions was clear.

Higher oil prices raise inflation expectations, which can delay central-bank rate cuts and reduce liquidity for risk assets.

Jeff Mei, chief operating officer at BTSE, said: "Given that Iran has been isolated from global financial markets for quite some time, we believe that downside risk is limited," and added, "Some have been concerned about oil prices and their potential impact on inflation, but the world has been weaned off Iranian oil and increased supply from OPEC and the US should be enough to stabilize prices."

Amazon Web Services reports outage after UAE data center fire

Technology infrastructure was also affected.

Amazon Web Services reported a disruption after objects struck one of its UAE data centers, causing a fire and forcing authorities to shut down power while emergency crews responded.

AWS said “One of our Availability Zones ... was impacted by objects that struck the data center, creating sparks and fire.”

The company rerouted traffic to other facilities and said it had no estimate for full restoration.

The incident occurred the same day Iranian retaliatory strikes hit the UAE, though a direct connection has not been confirmed.