Oil prices experienced a significant surge of more than 3% following a U.S. military strike on Iranian rocket launchers near the Strait of Hormuz. This action represents the first U.S. military engagement in the region in approximately one month.

The escalation comes days after the Trump administration had reportedly shifted its focus toward economic pressure against Iran. A return to open conflict poses potential risks to regional stability.

Brent crude, the international benchmark, rose 3.8% to $91.40 per barrel in early trading. U.S. benchmark crude oil saw a similar increase, trading 3.8% higher at $86.58 per barrel.

"The Middle East had finally gone quiet enough for oil traders to start sanding some of the war premium out of crude. Then Sunday arrived, with a reminder that quiet in the Strait of Hormuz is not the same as peace," Stephen Innes of SPI Asset Management said in a commentary.

Global markets showed mixed reactions. In early European trading, Germany’s DAX lost 0.9% and the CAC 40 in Paris edged 0.1% lower. Markets in Britain were closed for a holiday. U.S. futures for the S&P 500 and the Dow Jones Industrial Average were down 0.2%.

Markets in Asia fell, influenced by expectations that the U.S. Federal Reserve may soon raise interest rates. This sentiment was reinforced by a speech from Fed Chairman Kevin Warsh, who indicated the central bank would take necessary steps to curb inflation, even if it causes short-term economic pain. Tokyo's Nikkei 225 lost 0.1%, Hong Kong's Hang Seng fell 0.1%, and Australia’s S&P/ASX 200 dropped 0.2%. The Kospi in South Korea, however, reversed earlier losses to gain 0.5%.

On Friday, the S&P 500 fell 0.2%, the Dow industrials dipped by less than 0.1%, and the Nasdaq composite declined 0.5%. The yield on the two-year Treasury, a closely watched indicator of Fed policy expectations, rose to 4.35% from 4.22% following Warsh's speech.

Fed Chairman Warsh emphasized the importance of short-term interest rates as the primary tool for managing inflation and maintaining a strong job market. Despite President Donald Trump's expressed preference for lower interest rates, the Fed's dual mandate of low inflation and full employment remains central to its policy decisions.

In currency markets, the U.S. dollar fell to 159.75 Japanese yen from 160.10 yen. The euro rose to $1.1601 from $1.1580.