HONG KONG - Oil prices soared and stocks fell in Asia on Monday after US-Israeli strikes on Iran sent investors fleeing the prospect of an extended conflict in the crude-rich Middle East.
Brent briefly spiked almost 14 percent and West Texas Intermediate nearly 12 percent at the start of business after the attack on the Islamic Republic, which killed supreme leader Ayatollah Ali Khamenei and other senior officials.
The bombings have also seen the vital Strait of Hormuz -- through which around 20 percent of global seaborne oil passes -- effectively shut and several ships attacked, fanning supply fears.
Equity markets across Asia sank, with Tokyo, Hong Kong, Singapore, Wellington and Taipei all deep in the red. US futures were down more than one percent.
However, energy firms rallied, with Australia's Woodside Energy jumping more than five percent and Santos climbing nine percent, while PetroChina added almost four percent in Hong Kong. Inpex in Japan was up more than 10 percent.
Gold -- a key go-to safe haven in times of turmoil -- climbed two percent.
While the strikes have ramped up geopolitical worries, traders wound down their initial bets, with crude sitting around five percent higher and stock markets paring losses.
Brent, the international benchmark for crude, had already rallied last week on growing concerns Trump would order an attack as talks aimed at curtailing Iran's nuclear programme stuttered.
"If higher oil prices persist, it raises the risk of stickier headline inflation and can slow the pace at which inflation prints improve," wrote Saxo Markets' Charu Chanana.
"That does not automatically mean policy tightening, but it can make the Fed more cautious about cutting quickly, because energy-driven inflation can spill into expectations and broader pricing behaviour over time."
The US president has called on Iranians to rise up against their government and said the war could last "four weeks".
Iran's retaliatory missile and drone campaign in the Gulf killed four people and wounded dozens more, the UAE foreign ministry said.
While Iran has not officially closed the Strait of Hormuz, its Revolutionary Guards have warned against transiting the waterway.