BANGKOK – A wave of U.S. and Israeli military strikes on Iran sent shockwaves through global financial markets on Monday, causing U.S. futures to drop over 1% and driving oil prices higher.

Asian markets reacted negatively as trading commenced.

In Japan, the Nikkei 225 index saw a decline of 2.4%, settling at 57,430.18, while Australia’s S&P/ASX 200 fell by 0.4%, reaching 9,159.60.

Meanwhile, futures for major U.S. indices also faced declines: the S&P 500 futures decreased by 1.1%, the Dow Jones Industrial Average futures dropped by 1.2%, and the Nasdaq composite futures dipped by 1.1%.

Amidst this uncertainty, gold—often considered a safe investment during turbulent times—experienced a price increase of 2.3%, reaching 5,380.60, while silver rose by 2.1%.

Investors anticipated disruptions in oil supply from Iran and other parts of the Middle East. The region has been fraught with attacks, including incidents involving two ships navigating the Strait of Hormuz, a critical passageway for global oil shipments, significantly affecting the export capabilities of various nations.

“Roughly one-fifth of global oil and LNG (liquefied natural gas) flows squeeze through the Strait of Hormuz. This is not an obscure canal. It is the aorta of the global energy system,” Stephen Innes of SPI Asset Management said in a commentary.

The price of a barrel of U.S. benchmark crude oil surged 6.8% to $71.58. Brent crude jumped 7.5% to $78.33 per barrel.

Prolonged attacks would likely result in higher prices for crude oil and gasoline, according to energy experts.

Iran exports roughly 1.6 million barrels of oil a day, mostly to China, which may need to look elsewhere for supply if Iran’s exports are disrupted, another factor that could increase energy prices.

The attacks were anticipated, however, with a massive buildup of U.S. forces in the Middle East, and traders have adjusted according.

On Friday, the S&P 500 fell 0.4% to finish just its second losing month in the last 10. The Dow industrials dropped 1.1%, and the Nasdaq composite fell 0.9%. Treasury yields fell in the bond market as investors sought safer places for their money.

“When markets are fragile, they do not need a knockout blow. They just need another weight on the bar,” Innes said.

Also hurting the broad market was a report Friday showing that inflation at the U.S. wholesale level was at 2.9% last month, much higher than the 1.6% that economists expected.

That could pressure the Federal Reserve to hold off longer on its cuts to interest rates. Lower rates would give the economy and prices for investments a boost, but they risk worsening inflation at the same time.