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Key events

Oil prices rallied and stocks tumbled again on Monday as the Middle East crisis escalated with the entry of Yemen’s Houthis into the war and concerns the US will send in ground troops.

The surge in oil prices and the prospect of an extended conflict put more pressure on equities amid fears about a surge in inflation that could hit the world economy.

Tokyo sank more than 4% and Seoul more than 3%, while Hong Kong, Shanghai, Sydney, Singapore, Wellington, Taipei, Jakarta and Manila were also sharply down, reports Agence France-Presse.

The losses followed a bad day on Wall Street, where all three main indexes tumbled after the US and Israel struck Iranian nuclear sites.

“The market is now reacting to higher crude pricing and towards the fallout in the economic consequences,” wrote Pepperstone’s Chris Weston.

The Israel military is reportedly saying it is responding to missiles fired from Iran.

Qatar says there has been a garage fire in an industrial area and that civil defence has it has brought it under control.

No injuries were reported, the interior ministry said on X on Monday, without giving more details.

On Sunday Qatar and Bahrain said they had intercepted missiles and drones fired towards them.

Israel attacks regime sites across Tehran

The Israeli military has just said it is currently attacking the Iranian regime’s infrastructure “throughout Tehran”.

The brief post on X gave no further details.

Indonesia condemned the death of an Indonesian peacekeeper with the UN mission in Lebanon (Unifil) on Monday, after a projectile exploded at one of its positions near the southern Lebanese village of Adchit al-Qusayr on Sunday.

Indonesia’s foreign ministry said harm towards UN peacekeepers was unacceptable, and reiterated its condemnation of Israeli attacks in southern Lebanon, calling on all parties to respect Lebanon’s sovereignty.

Unifil peacekeepers drive past a destroyed healthcare centre building earlier this month after an Israeli strike in the southern Lebanese town of Burj Qalawiya. Photograph: Kawnat Haju/AFP/Getty Images

South Korean airlines have asked their government to help redirect jet fuel exports to the domestic market, threatening half of Australia’s imports of the critical fuel after Chinese authorities earlier this month flagged export restrictions.

Amid deepening concerns across Asia about the impact of the escalating Middle East conflict, an official at South Korea’s transport ministry told the Guardian that “some domestic carriers” had asked authorities to redirect export-bound jet fuel back to the local market due to supply concerns.

Any move to restrict exports would hit import-dependent countries particularly hard. For instance, Australia sources roughly a quarter of its refined fuel imports from South Korea, including 18% of our total jet fuel imports.

Graph of fuel imports

China, which supplies a third of Australia’s jet fuel, has according to reports already moved to restrict fuel exports, although Chris Bowen, Australia’s energy minister, late last week said Chinese jet fuel supplies were assured until late April or early May.

The price of brent crude had now gone over $116 a barrel, while stock markets have slumped in Asia as investors dig in for a protracted Gulf conflict that could bring a spike in inflation and the risk of recession to much of the globe.

Brent crude was just over $70 a barrel when the war started last month and prices have risen by more than 50% since.

Iran’s de facto closure of the vital strait of Hormuz has sent prices for oil, gas, fertiliser, plastic and aluminium surging, along with fuel for planes and shipping.

An electronic quotation board displays the Nikkei stock average on the Tokyo stock exchange. Photograph: Kazuhiro Nogi/AFP/Getty Images

Much of Asia is highly dependent on energy from the Middle East, making the region particularly vulnerable in the ongoing crisis.

Japan’s Nikkei shed another 4.7% early on Monday, bringing losses for March to almost 14%. South Korea’s market fell 4.2%.

Welcome summary

Hello and welcome to our continuing live coverage of the Iran war and its impact on the region, the world and the global economy.

Donald Trump has said his “preference would be to take the oil” in Iran and that US forces could seize the regime’s export hub on Kharg Island, the Financial Times is reporting, as the US sends thousands of troops to the Middle East.

The US president compares the potential move to Venezuela, where the US intends to control the oil industry “indefinitely” following its ousting of president Nicolás Maduro in January.

Trump said in the interview with the FT on Sunday:

double quotation markTo be honest with you, my favourite thing is to take the oil in Iran, but some stupid people back in the US say: ‘why are you doing that?’ But they’re stupid people.”

Such a move would involve seizing Kharg Island, through which most of Iran’s oil is exported, the FT report continues. But an assault on the export hub would be risky, raising the chances of more US casualties and extending the cost and duration of the war.

“Maybe we take Kharg Island, maybe we don’t. We have a lot of options,” Trump said.

Kharg Island is a crucial oil hub for Iran. Photograph: European Space Agency/AFP/Getty Images

The newspaper also quoted Trump as stressing that, despite his threats to seize Iranian oil production, indirect US-Iran talks via Pakistani “emissaries” were progressing well.

Here are more key developments:

The UN peacekeeping mission in Lebanon said a peacekeeper was killed when a projectile exploded at one of its positions near the southern Lebanese village of Adchit al-Qusayr on Sunday. Another peacekeeper was critically injured, it said early on Monday.
The Israeli air force intercepted two unmanned aerial vehicles launched from Yemen, the IDF has posted online.
Benjamin Netanyahu announced an expansion of Israel’s invasion of southern Lebanon as his forces target Hezbollah. “I have just ‌instructed to further expand the existing security buffer zone. We are determined to fundamentally change the situation in the north,” ⁠the Israeli PM said in a ⁠video statement from the northern command. Israeli forces are currently occupying the area south of the Litani River, and its destruction of key bridges connecting to the rest of Lebanon and forced displacement of residents have stoked fears of a protracted occupation.

An Israeli artillery unit fires towards Lebanon in northern Israel at the weekend. Photograph: Ayal Margolin/Reuters

Pakistan will soon host talks between the US and Iran, its foreign minister said, as top diplomats from Pakistan, Saudi Arabia, Turkey and Egypt met in Islamabad to discuss ways to de-escalate the war. Neither Washington nor Tehran have yet commented.
Earlier, Iranian parliament speaker Mohammad Bagher Ghalibaf said Iranian forces were “waiting” for US ground troops to arrive so they could “rain fire upon them”. It came after reports that the Pentagon is preparing for weeks of possible “ground operations” in Iran, and as thousands of US soldiers and marines arrive in the region.
Power has reportedly been restored across parts of Iran after Israeli strikes hit “electricity infrastructure”, Iran’s energy minister said.
The International Atomic Energy Agency confirmed that Iran’s heavy-water production plant at Khondab – which Israel attacked on 27 March – had “sustained severe damage and is no longer operational”. In a post on X, the agency added that the Khondab heavy water research reactor “contains no declared nuclear material”. The Israeli military had described the site as a “key plutonium production site for nuclear weapons” when it bombed the facility on Friday.
A fire at an industrial site in southern Israel has been been brought under control, hours after being declared a “hazardous materials incident” in the area. The IDF said the fire at the Neot Hovav industrial complex may have been caused by “a weapon fragment or interceptor fragment”.
I‌ranian supreme ‌leader Mojtaba Khamenei thanked the ‌Iraqi people and religious leadership for their ⁠support ⁠of Iran “in ‌the face of aggression”, Iranian state media reported, without saying how this message was conveyed. More than three weeks on from his appointment as supreme leader, Khamenei has still not been seen or heard from in public since he was injured in the US-Israeli airstrike that killed his father, the late ayatollah Ali Khamenei, his wife and son on the first day of the war.
On Palm Sunday, the Pope said God rejected the prayers of leaders who started wars and had “hands full of blood”, in an apparent rebuke to Trump’s administration.