Oil prices surged on Monday after a drone strike ignited a fire at an Emirati energy facility in Fujairah, shaking fragile ceasefire hopes.
Brent crude rose more than five percent as traders reacted sharply to renewed tensions in the Middle East.
US warships also transited the Strait of Hormuz under a new protection mission, heightening fears over global energy flows.
The UAE defence ministry said Iranian drone and missile attacks were targeting its territory, escalating regional uncertainty further.
Tehran has effectively tightened control over the Strait of Hormuz amid ongoing conflict linked to a wider US-Israeli military campaign.
Global markets pulled back as geopolitical risks outweighed recent optimism driven by strong tech earnings and artificial intelligence demand.
Wall Street indices slipped from record highs, with investors taking profits after weeks of gains in risk-heavy assets.
Analysts described the downturn as cautious profit-taking rather than panic, despite growing concerns over Middle East escalation.
Asian markets diverged sharply, with Seoul and Taipei hitting record highs on a powerful rally in semiconductor and AI stocks.
SK hynix surged over twelve percent, while Samsung and TSMC also posted strong gains amid renewed tech sector momentum.
European equities weakened, with Paris and Frankfurt both falling more than one percent as risk sentiment deteriorated across the region.
Key energy benchmarks remained elevated, with West Texas Intermediate and Brent crude both extending sharp gains on supply fears.