Iran war enters fourth week, European stocks open lower

Investing.com - European stock markets opened lower on Monday as investors assess U.S. President Donald Trump’s final warning regarding Iran reopening the Strait of Hormuz.

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As of 04:00 AM Eastern Time (08:00 GMT), the pan-European STOXX 600 index fell 1.3%, Germany’s DAX declined 2.0%, France’s CAC 40 dropped 1.6%, and the UK’s FTSE 100 decreased 1.3%.

European markets followed weak Asian markets, where stocks declined sharply. Many Asian countries heavily rely on imports from the Gulf region, making them particularly vulnerable to energy shocks.

Thomas Matthews, Head of Asia-Pacific Markets at Capital Economics, said, “Escalating war remains bad news for asset markets.”

As the U.S. and Israel’s joint strikes on Iran enter their fourth week, a new wave of attacks on Tehran has caused nationwide power outages in the Iranian capital.

However, most focus remains on the Strait of Hormuz, a vital waterway in southern Iran through which about one-fifth of the world’s oil supplies pass. Due to fears of Iranian attacks, ships have been effectively prevented from passing through the strait, and container shipping companies are struggling to find insurance for voyages.

Trump threatened that if Tehran does not reopen the strait by Monday evening, the U.S. will attack Iran’s critical power facilities. Iran dismissed the threat, stating that if any of its energy infrastructure is bombed, the strait will remain “completely closed.”

Global benchmark Brent crude oil futures surged amid ongoing market concerns that the conflict could lead to a long-term closure of the strait, affecting supply from the key Persian Gulf production region.

Brent crude rose 2.9% to $109.52 per barrel, from Friday’s close of $112.19. Before the Iran conflict began, Brent traded at around $70 per barrel.

Europe, especially its main importers of natural gas like Qatar, is heavily dependent on energy supplies from the Gulf. A key natural gas plant in Qatar was recently hit in an airstrike during Iran’s attacks targeting various Middle Eastern locations, causing a sharp rise in European natural gas prices.

Last week, the European Central Bank warned that prolonged fighting could reignite inflation pressures, which had appeared largely under control before the outbreak of war in late February. The ECB stated that policymakers are now prepared to adjust interest rates as needed, fueling speculation that officials may consider raising borrowing costs in the coming months.

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