New York: U.S. stock markets opened sharply lower on Monday as surging oil prices triggered by the escalating Middle East conflict weighed heavily on global investor sentiment and economic outlook.

All three major Wall Street indices slipped more than one per cent in early trading. The Dow Jones Industrial Average fell 1.2 per cent to 46,921.58, reflecting a broader global sell-off across equity markets.

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Futures for the S&P 500, Nasdaq Composite, and the Dow had already dropped more than one per cent ahead of the opening bell after declining over two per cent late Sunday as concerns over the intensifying conflict between Iran and Israel rattled investors.

Oil prices surged sharply amid fears that the ongoing war could disrupt production and shipping routes across the Middle East. Prices briefly approached $120 per barrel before stabilising.

As of 7:45 a.m. EDT, Brent Crude was trading at $104.94 per barrel, while West Texas Intermediate stood at $103.27. Both benchmarks were more than 13 per cent higher compared to their closing levels on Friday.

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The spike in fuel costs also weighed on airline stocks. Shares of major carriers, including Delta Air Lines, American Airlines, and United Airlines, fell over three per cent in premarket trading as investors anticipated higher operating costs.

Global markets also reflected the growing uncertainty. Japan’s Nikkei 225 index plunged more than five per cent, while key European markets declined between two and three per cent.

The surge in energy prices is raising broader concerns about inflation and global economic growth, particularly as many economies are still adjusting to higher tariffs on exports to the United States introduced during the administration of Donald Trump.

Meanwhile, senior officials from Southeast Asian nations are gathering this week in Manila, Philippines, where discussions are expected to focus on mitigating the economic impact of rising energy costs.

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“Oil prices will reach a peak at some point –- maybe they already have, maybe there’s more to come -– but they are likely to fluctuate at elevated levels for weeks, perhaps months,” Ipek Ozkardeskaya of Swissquote said in a commentary. “Eventually -– even if the war persists –- energy prices will likely come down. But during this period, high energy prices will revive inflation globally and weigh notably on growth.”

The last time crude oil crossed the $100 per barrel mark was in 2022, shortly after Russia launched its invasion of Ukraine, an event that had also sent global energy markets into turmoil.