Berliner Boersenzeitung - Stocks tumble, oil jumps on Trump's Iran ultimatum

With the conflict now in its fourth week and showing no sign of ending, the head of the International Energy Agency warned of the worst global energy crisis in decades and said the world economy was under "major threat" from it.

Observers, meanwhile, have also raised the prospect of a surge in inflation that could force central banks to hike interest rates, while the choking off of fertiliser shipments has also fanned concerns about global food security.

The US president on Saturday gave Iran 48 hours to reopen the Strait of Hormuz to shipping or face the destruction of its energy infrastructure.

The ultimatum, made just a day after the US leader said he was considering "winding down" military operations, came as the waterway -- through which a fifth of global oil and gas flows -- remained effectively closed.

Trump wrote on Truth Social that the US would "hit and obliterate" Iranian power plants -- "starting with the biggest one first" -- if Tehran did not fully reopen the strait within 48 hours, or 23:44 GMT on Monday, according to the time of his post.

That came a day after Trump ruled out a ceasefire agreement, saying Washington had the upper hand.

Iran warned Hormuz "will be completely closed" if Trump acted on his threat.

And powerful parliament speaker Mohammad Bagher Ghalibaf threatened to irreversibly destroy vital infrastructure across the region, which he said would cause oil prices to rise "for a long time", if Tehran's own infrastructure was hit.

Iranian media reported explosions in Tehran on Monday as Israel announced it launched another wave of strikes, while Saudi Arabia and the United Arab Emirates reported coming under fresh attacks.

The latest escalation came as Israel's military said it will expand its ground operations in Lebanon against Iran-backed militant group Hezbollah, while a spokesman said the country faced "weeks" more fighting against Iran and Hezbollah.

- Deadline focus -

The escalation hammered stock markets, with Seoul and Tokyo -- which had been the standout performers before the war started -- taking the brunt of the selling, shedding 6.5 percent and 3.5 percent, respectively.

Hong Kong and Shanghai shed more than three percent, while Singapore, Taipei, Mumbai, Bangkok and Manila all lost between two and three percent. Sydney and Wellington were also deep in negative territory.

London, Paris and Frankfurt opened sharply lower.

South Korea's won dropped to 1,510 won per dollar, its weakest level since 2009.

Oil prices jumped more than two percent with Brent above $114 and West Texas Intermediate topping $101.

"The outcome and Trump's next steps, particularly in the event of escalation, would have significant implications for markets through the remainder of the week and into month and quarter end," wrote Pepperstone's Chris Weston.

He added that while the president has often pulled back from the brink on issues in the past, Trump "has also shown credibility in following through with military action when demands are not met, so markets will place weight on his weekend post on Truth Social".

"If we move past the deadline, focus will quickly shift to the scale of any action against Iran and the nature of Iran's response, particularly toward US bases and its allies."

IEA boss Fatih Birol said Monday: "The global economy is facing a major, major threat today, and I very much hope that this issue will be resolved as soon as possible.

"No country will be immune to the effects of this crisis if it continues to go in this direction. So there is a need for global efforts."

Birol added that the world was losing more oil each day than the combined impact of both 1970s oil shocks and Russia's invasion of Ukraine.

His remarks came as central banks reconsider their monetary policies amid expectations that the surge in oil prices will send inflation soaring, with the Reserve Bank of Australia last week hiking interest rates.

The prospect of higher borrowing costs has hammered non-yielding gold, which has fallen for eight straight days and just suffered its worst weekly drop since 1983.

Bullion was sitting around $4,350 Monday, having hit a record high of almost $5,600 at the end of January.

- Key figures at around 0815 GMT -

Tokyo - Nikkei 225: DOWN 3.5 percent at 51,515.49 (close)

Hong Kong - Hang Seng Index: DOWN 3.5 percent to 24,382.47 (close)

Shanghai - Composite: DOWN 3.6 percent at 3,813.28 (close)

London - FTSE 100: DOWN 1.5 percent at 9,773.76

West Texas Intermediate: UP 3.5 percent at $101.64 per barrel

Brent North Sea Crude: UP 1.7 percent at $114.11 per barrel

Euro/dollar: DOWN at $1.1528 from $1.1550 on Friday

Pound/dollar: DOWN at $1.3293 from $1.3323

Dollar/yen: UP at 159.58 yen from 159.30 yen

Euro/pound: UP at 86.73 pence from 86.68 pence

New York - Dow: DOWN 1.0 percent at 45,577.47 (close)

(K.Müller--BBZ)