ISTANBUL

European stock markets closed in negative territory Monday as escalating tensions in the Middle East and a sharp rise in oil prices weighed on investor sentiment.

Global markets were shaken after oil prices surged, with Brent crude briefly climbing back toward the $100 level and US West Texas Intermediate (WTI) crude futures rising 5% to $95.81 per barrel.

The spike in energy prices was triggered after major producers including Kuwait, Iran and the United Arab Emirates cut production following the closure of the Strait of Hormuz.

The energy market turmoil spilled over into equities, with the benchmark Stoxx Europe 600 index closing down 0.63% at 594.92 points.

Most sectors declined, while rising bond yields fueled inflation concerns.

Among major indexes, Britain’s FTSE 100 fell 0.34% to 10,249.52, Italy’s FTSE MIB 30 dropped 0.29% to 44,024.96, France’s CAC 40 declined 0.98% to 7,915.36 and Germany’s DAX 40 lost 0.77% to 23,409.37.

The euro weakened 0.31% against the US dollar to 1.158.

French Economy Minister Roland Lescure said the G7 is prepared to release emergency oil stockpiles if required.

"We are ready to take the necessary measures, including drawing on strategic reserves to stabilize the market," Lescure said, adding "we are not there yet."

Following the remarks, Brent crude briefly fell back below $100, easing some pressure on European stocks.

Mining and aviation stocks led losses, with Anglo American down 3.2%, Rolls-Royce falling 2% and Lufthansa Group dropping 6.14%.

Energy companies benefited from the higher oil prices, with BP gaining 2.3% in London and Shell rising 2.5% in Amsterdam. Italy’s Eni and Austria’s OMV also posted gains.

Government bond yields across Europe rose amid concerns that higher energy costs could fuel inflation.

Britain’s 10-year gilt yield climbed 3 basis points to 4.66%, while the 2-year yield reached 4%. In Germany, the 2-year yield stood at 2.33%.