Crude oil prices jumped more than 6% to a two-week high on Wednesday after US President Donald Trump declared the tentative ceasefire with Iran over.
The announcement sparked fresh declines in stock markets across Europe and Asia.
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The international benchmark Brent crude rose to $78.79 a barrel, while US benchmark crude climbed 6.3% to $74.88 a barrel.
The price surge followed overnight US military strikes on more than 80 targets in Iran.
Major energy companies saw immediate gains. Shell shares rose 5%, while BP, Chevron, and ExxonMobil all advanced over 3% in early Wednesday trading.
“To me, I think it's over.
I don't want to deal with them,” Trump told reporters at the NATO summit in Ankara, as reported by Reuters.
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The escalation adds to existing market volatility driven by a recent sell-off in artificial intelligence shares. That sell-off had previously pushed technology valuations beyond expected productivity gains.
“As such, geopolitical headlines will likely determine market sentiment over the coming hours.
A further deterioration in the situation could weigh further on equity valuations along with rising stress in technology,” said Ipek Ozkardeskaya, an analyst at Swissquote.
In equity markets, Germany's DAX shed more than 2.2% and Tokyo's Nikkei 225 lost 2.1%.
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South Korea's Kospi dropped 5.4% following heavy selling in tech giants Samsung Electronics and SK Hynix.
