US stocks closed lower on Monday as investors turned cautious amid escalating conflict between the United States and Iran, rising oil prices, and growing anticipation ahead of a crucial week of corporate earnings from major technology companies.
Markets initially opened higher but lost momentum as geopolitical concerns intensified. Iranian President Masoud Pezeshkian said the country was involved in a “full-scale war” with the United States, while Yemen’s Houthi movement announced plans to blockade Saudi Arabian ports, threatening Riyadh’s alternative oil export routes outside the Strait of Hormuz.
The renewed tensions followed reports over the weekend that three additional US military personnel had been killed and another remained missing during the conflict.
Energy prices climbed sharply as fears of supply disruptions resurfaced. Brent crude settled 1.3% higher at $89.22 per barrel after briefly rising above the $90 mark, while US gasoline prices climbed back above $4 per gallon, according to AAA.
“The US-Iran situation is becoming increasingly uncertain,” said Patrick O’Hare, chief market analyst at Briefing.com.
Technology shares offered mixed signals. Semiconductor stocks recovered after last week’s losses, but investors remained cautious ahead of earnings from AI-driven market leaders, questioning whether results would justify lofty valuations.
“Confidence remains limited,” O’Hare said. “The focus isn’t simply whether companies like Alphabet and Tesla exceed expectations, but whether they deliver results strong enough to support current valuations.”
Earlier in the day, most Asian stock markets also finished lower as higher oil prices and persistent concerns over stretched valuations in artificial intelligence-related stocks dampened sentiment.
Oil has rallied over the past week as military exchanges between Washington and Tehran fueled concerns that shipping through the Strait of Hormuz—responsible for transporting roughly one-fifth of global oil supplies—could face prolonged disruption.
Despite the escalating rhetoric, Iranian officials indicated diplomatic efforts were continuing behind the scenes.
“We have received messages through mediators in recent days,” Iranian Foreign Ministry spokesman Esmaeil Baghaei said during a press briefing, suggesting diplomatic channels remained active despite the conflict.
Markets also monitored the security of Saudi Arabia’s oil exports. While the kingdom continues shipping crude through its Red Sea terminal at Yanbu, export volumes remain below pre-conflict levels as traders assess the potential impact of the Houthi blockade.
The Houthis, who have battled Saudi Arabia for years, have not detailed how they intend to enforce the blockade, but investors remain wary that renewed attacks on shipping in the Red Sea and Gulf of Aden could further tighten global energy supplies.
In Europe, the British pound weakened against the US dollar following Andy Burnham’s appointment as the UK’s prime minister and his unexpected selection of former Defence Secretary John Healey as finance minister.
London’s FTSE 100 declined 0.7% as investors weighed the impact of surging oil prices, rising shipping risks around the Strait of Hormuz, and uncertainty surrounding the UK’s new political leadership.
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