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European stock markets opened slightly higher on Monday as investors monitored rising oil prices and the continuing conflict in the Middle East, which has now entered its third week.
By 04:04 ET (08:04 GMT), the pan-European Stoxx 600 index gained 0.1%, while Germany’s DAX rose 0.1%, France’s CAC 40 added 0.1%, and the U.K.’s FTSE 100 climbed 0.4%.
Middle East tensions remain in focus
The ongoing U.S.–Israeli military campaign against Iran continues to spread instability across the region.
Saudi Arabia reported that it had intercepted more than 60 drones flying over its territory, although the Kingdom’s defense ministry did not specify where the drones originated or what their intended targets were.
Meanwhile, U.S. President Donald Trump said Washington had approached seven countries seeking support to help maintain security in the Strait of Hormuz, a critical maritime corridor through which about 20% of global oil supply passes. Trump did not confirm whether any of the countries had agreed to participate.
Iran has effectively shut down tanker traffic through the strait, driving energy prices sharply higher and raising concerns about the impact on the global economy.
Inflation risks weigh on Europe
The disruption poses particular risks for Europe, which relies heavily on imported oil and gas shipped through the Strait of Hormuz.
The sudden spike in energy costs threatens to reignite inflation in the region, which only recently appeared to have brought price pressures under control.
Higher oil and gas prices have also pushed borrowing costs across Europe higher, reflecting fears that the European Central Bank (ECB) may eventually need to reconsider interest rate hikes.
Since the conflict began, the Stoxx 600 index has fallen more than 5% from its pre-war peak, highlighting investor concerns over the economic fallout.
Central bank decisions ahead
The ECB, along with several other major central banks—including the U.S. Federal Reserve—is scheduled to announce policy decisions later this week.
Despite the geopolitical tensions, economists surveyed by Reuters expect the ECB to keep interest rates unchanged for the remainder of 2026.
Oil rises amid supply fears
Energy markets remained volatile as traders assessed the risk of further supply disruptions.
By 04:06 ET, Brent crude futures rose 2.7% to $105.90 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 2.0% to $98.75 per barrel.
Oil prices had earlier jumped as much as 3% before trimming gains, briefly turning flat after Trump called on countries—including China—to assist in restoring shipping through the Strait of Hormuz.
With tanker traffic largely halted and tensions continuing to escalate, oil markets remain highly sensitive to developments in the region, keeping investors cautious across global financial markets.
