Oil prices rose while stocks and bonds weakened on Monday as investors shunned risk assets, after US President Donald Trump threatened to launch renewed attacks on Iran unless it agreed to a deal to end the war.
Brent, the benchmark for two thirds of the world's oil, climbed 1.78 per cent to $111.20 a barrel at 10.30am UAE time. West Texas Intermediate, the gauge that tracks US crude, rose 2.08 per cent to close at $107.60 per barrel.
Brent, which settled 3.35 per cent higher on Friday, has risen for the third successive trading session, as traders consider the prospects of renewed US-Israeli strikes on Iran. Arab states in the region ace continued attacks linked to Tehran.
Mr Trump on Sunday warned “the clock is ticking” for the Iranian leadership and said “they better get moving, fast, or there won’t be anything left of them”. “Time is of the essence,” he added in the post on Truth Social.
He is expected to convene his national security team in the White House on Tuesday as tension with Iran escalates and the US puts military options back on the table, Axios reported. Since the ceasefire began on April 8, Mr Trump has threatened to resume strikes several times.
"The US and Iran remain far apart over a deal to end the conflict on Sunday, despite Trump's visit to Beijing last week in which China offered to help reopen the Strait of Hormuz,” Mayed Alrashdi, an analyst at Emirates NBD, wrote in a report on Monday.
While Mr Trump is trying to force Tehran to move fast to secure a deal and reopen the strait, Iranian media claims “Washington had offered no tangible concessions", Mr Alrashdi added.
While the US allowed a waiver on the sale of Russian crude to lapse, adding to a supply crunch, continued attacks on Gulf states has kept the risk premium high.
The UAE on Sunday faced a drone attack that caused an electrical generator fire outside the inner perimeter of Abu Dhabi's Barakah Nuclear Energy Plant. No injuries were reported and there was no impact on radiological safety levels, Abu Dhabi Media Office said.
The UAE said it launched an investigation to determine the source of the drone attack.
Saudi Arabia also said on Monday that it intercepted three drones launched from Iraqi territory.
The Strait of Hormuz, the vital trade rout through which a fifth of global oil and gas supplies flowed before the war, remains shut. The closure has delivered a supply shock and analysts expects oil prices to climb beyond $150 a barrel level.
They could hit the $200 mark if the strait remains shut for a long period of time. Brent has risen more than 50 per cent since the conflict began on February 28.
Bond rout
The risk of renewed hostilities in the Gulf is further stoking concerns of global economic slowdown as inflation continues to climb amid rising fuel prices at the pump.
The slump in Japanese government bonds is leading the global debt markets rout as yields climb to multi-decade highs.
Japan’s 30-year bond yield surged as much as 20 basis points to the highest level since the tenor’s debut in 1999, before paring back some of the move. Shorter-maturity Japanese debt was also under pressure, underscored by weak demand at a sale of five-year notes that offered a record-high coupon of 2 per cent, a Bloomberg report found.
Yields on 10-year US Treasuries also advanced three basis points to 4.63 per cent in Asia on Monday, the highest since February 2025. Those on 30-year US bonds have risen above 5 per cent and are near their highest since 2007.
“The big story – and dominant market driver – is becoming the rapid sell-off across sovereign bond markets, as bond yields in major economies, including the US and Japan, soared last week after a set of inflation numbers showed that price pressures accelerated faster than analysts expected due to Middle East-led energy price pressures,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Yes, it was predictable.”
Stocks dip
While haven US dollar has continued to strengthen, stocks are coming off their highs with Asian markets slumping on Monday. Japan’s Nikkei 225 index retreated 09 per cent, while Australia's S&P/ASX 200 fell 1.47 per cent. Hong Kong's Hang Seng dropped 1.3 per cent as the Shanghai Composite and BSE Sensex in India also retreated fell 0.2 per cent and 0.6 per cent respectively.
US Stock futures also dropped, with both S&P 500 and Nasdaq 100 futures falling 0.6 per cent each.
“A correction is inevitable. The Nasdaq 100 price-to-earnings ratio is above 38 today, meaning that a correction would actually be healthy to bring valuations back to a more reasonable – and down to Earth – level,” Ms Ozkardeskaya said.
“The focus will remain on Iran and the Strait of Hormuz, but also on UK inflation, FOMC meeting minutes and flash PMI numbers across major economies.”
