Oil prices surged and Asian stocks fell Monday after U.S.-Israeli strikes in Iran stoked fears of a prolonged Middle East conflict.

Brent crude briefly jumped nearly 14% and West Texas Intermediate nearly 12% after the attack, which reportedly killed Iran’s supreme leader Ayatollah Ali Khamenei and other senior officials. The strikes also disrupted the Strait of Hormuz, a vital oil route, and targeted multiple ships, raising supply concerns.

Equities tumbled across Asia, with Tokyo, Hong Kong, Singapore, Mumbai, Bangkok, Wellington, and Taipei in the red. U.S. futures fell more than 1%, while Shanghai edged higher and Sydney was flat.

Airline stocks were hit hardest. Cathay Pacific fell 3%, Qantas 5.4%, Singapore Airlines 4.3%, and Japan’s ANA and JAL dropped over 5%. Energy companies, meanwhile, surged, including Woodside Energy and Santos (both +6%), PetroChina (+4%), and Inpex (+6%).

Gold rose 2%, and the dollar strengthened as investors sought safe havens. Crude later pared gains to about 5%, while stock losses eased.

“If higher oil prices persist, it raises the risk of stickier headline inflation and can slow the pace at which inflation prints improve,” wrote Saxo Markets’ Charu Chanana. “That does not automatically mean policy tightening, but it can make the Fed more cautious about cutting quickly, because energy-driven inflation can spill into expectations and broader pricing behaviour over time.”

President Donald Trump urged Iranians to rise up against their government and said the war could last “four weeks.” Iran’s Supreme National Security Council said the country “will not negotiate with the United States” and denied reports of outreach to the Trump administration.

Iran has continued a retaliatory missile and drone campaign in the Gulf. Tel Aviv also launched attacks on Lebanon after Hezbollah fired rockets in response to Khamenei’s killing. While Tehran has not officially closed the Strait of Hormuz, its Revolutionary Guards warned against transiting the waterway.

At least two ships were hit near Oman and the UAE, the British maritime agency UKMTO said. Iranian state TV reported an oil tanker was struck and sinking.

Amena Bakr, head of Middle East and OPEC+ research at Kpler, said insurance costs could make crude hit $90. “No matter how much spare capacity (in the strategic reserves) is not going to fill that gap. That gap is just too big,” she said. Michelle Brouhard, also at Kpler, called high oil prices “the Achilles heel of Trump,” noting Iran could keep prices high to pressure the U.S. ahead of midterm elections.

Gas prices also surged, as Qatar is a major LNG exporter. Economist Eric Dor of IESEG School of Management warned rising energy costs, shipping, and airline losses could harm growth. “If it’s a matter of three days, it’s not serious. But if it’s over a longer period, then it will have an additional recessionary effect,” he said.

Key figures (around 0700 GMT)

• WTI: +7.5% at $72.06/bbl

• Brent: +7.9% at $78.63/bbl

• Nikkei 225: -1.4% at 58,057.24

• Hang Seng: -1.9% at 26,113.57

• Shanghai Composite: +0.5% at 4,182.59

• Dow: -1.1% at 48,977.92

• FTSE 100: +0.6% at 10,910.55

• Euro/Dollar: 1.1733

• Pound/Dollar: 1.3374

• Dollar/Yen: 156.99