European markets close lower as oil price surges amid Middle East turmoil

LONDON — European stocks closed sharply lower as traders tracked developments in the Middle East and a surge in oil prices.

The pan-European Stoxx 600 provisionally closed down around 0.7%, with major bourses and all sectors except for oil and gas selling off.

European investors were monitoring more turbulence in global markets on Monday as oil prices rose on Sunday to over $110 per barrel for the first time since 2022, when Russia invaded Ukraine.

West Texas Intermediatecrude futures were last up 5% at $95.81 per barrel, while international benchmarkBrentcrude traded nearly 8% higher at $100 per barrel.

Yields in European government bonds rose sharply earlier as the war in Iran and surging oil prices drove concerns over higher inflation.

In the U.K., yields on 10-Year Gilts — the benchmark for U.K. government borrowing — were up 3 basis points to 4.664%. Yields on 2-Year Gilts were 13 basis points higher, reaching 4%, while 5-year Gilts were 5 basis points higher, at 4.175%. In Germany, 2-Year Bunds rose 1 basis point, paring earlier gains, pushing the cost of short-term borrowing to 2.333%.

The energy price surge comes after major Middle Eastern oil producers Kuwait, Iran and the UAE cut oil production following theclosure of the Strait of Hormuz.

U.S. President Donald Trump posted on Truth Social on Sunday that a gain in “short term oil prices” was a “very small price to pay” for destroying Iran’s nuclear threat. “Only fools would think differently!” Trump added.

Amid the heavy selling, British multinational miner Anglo-American was 3.4% lower, tumbling to the bottom of the FTSE 100, while Rolls-Royce, the London-listed aerospace and defense giant, was down 2%.

Asia markets tumbled overnight and U.S. stocks plunged at the open amid fears that higher energy prices could dramatically slow the U.S. economy.

There are no major earnings or data releases from Europe on Monday.