Global markets slumped as surging oil prices exacerbated inflation worries with the U.S.- Israeli war on Iran showing no signs of slowing ​down.

Wall Street futures were in the red after major North American markets closed sharply down on Friday.

TSX futures followed sentiment lower.

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On Wall Street, markets are watching earnings from Hewlett Packard Enterprise Co.

“Faced with the worst oil supply shock since the 1970s, ‌all eyes will be on Washington’s response,” said Helima Croft, head of global commodity strategy at RBC Capital Markets. “With no clear definition of what winning looks like, it is hard to forecast whether this will be a multi-week or multi-month conflict.”

Overseas, the pan-European STOXX 600 was down 1.66 per cent in morning trading. Britain’s FTSE 100 declined 1.37 per cent, Germany’s DAX slid 1.66 per cent and France’s CAC 40 gave back 1.89 per cent.

In Asia, Japan’s Nikkei closed 5.2 per cent lower, while Hong Kong’s Hang Seng fell 1.35 per cent.

Oil prices surged over US$119 a barrel, hitting levels not seen since mid-2022, ​as some major producers cut supplies ‌and fears of prolonged shipping disruptions gripped the market due to the expanding U.S.-Israeli war with Iran.

Brent crude futures were up 14 per cent to US$105.71 a barrel, while West Texas Intermediate (WTI) crude futures rose 13 per cent at US$103.06.

“Unless oil flows through the Strait of Hormuz resume soon and regional tensions ease, upward pressure on prices is likely to persist,” said Vasu Menon, managing director for investment strategy at OCBC in Singapore.

In other commodities, spot gold shed 1.4 per cent to US$5,097.70 an ⁠ounce after falling more than 2 per cent earlier in the session. U.S. gold futures for April delivery lost 1 per cent to trade at US$5,106.

The Canadian dollar strengthened against its U.S. counterpart.

The day range on the loonie was 73.48 US cents to 73.85 US cents in early trading. The Canadian dollar was up about 0.09 per cent against the greenback over the past month.

The U.S. dollar index, which weighs the greenback against a group of currencies, jumped 0.33 per cent to 99.31.

The euro fell 0.57 per cent to US$1.1552. The British pound dropped 0.63 per cent to US$1.3333.

In bonds, the yield on the U.S. 10-year note was last up at 4.178 per cent.

China’s CPI, PPI, foreign reserves, aggregate yuan financing and new yuan loans

Japan’s real cash earnings and bank lending

Germany’s factory orders and industrial production

(11 a.m. ET) U.S. New York Fed’s one-year inflation expectations

With Reuters and The Canadian Press