European stocks fall sharply as conflict grips the Middle East; oil prices jump

2026-03-03 06:18:09

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Plumes of smoke rise following reported explosions in Tehran on March 1, 2026, after Iran’s supreme leader, Ayatollah Ali Khamenei, was killed a day earlier in a large U.S. and Israeli attack, prompting a new wave of retaliatory missile strikes from Iran.

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LONDON — European stocks closed in negative territory as global markets dropped after the U.S. and Israel launched widespread attacks on Iran over the weekend.

The pan-European Stoxx 600 provisionally closed nearly 1.7% lower, with major bourses in negative territory.

Norwegian oil and gas exporters Vår Energi and Equinor were up 6% and 8% respectively, as concerns over global energy supplies grew.

European defense stocks closed mixed, paring earlier gains. Britain’s BAE Systems advanced 6%, while Swedish fighter jet maker Saab was 0.5% lower. Italy’s Leonardo was up nearly 3% and Germany’s Renk rose more than 3%. Italian aerospace staple Avio was down 1%.

Companies linked to the travel and tourism sector slumped as global disruption continued Monday. Carnival PLC, the Anglo-American cruise line operator, was down 8%, and International Consolidated Airlines was more than 5% lower. TUI AG dropped nearly 10%, and Lufthansa lost 5%.

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How European stocks reacted to the U.S.-Israeli strikes on Iran

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The strikes on Iran killed the country’s Supreme Leader Ayatollah Ali Khamenei, with the U.S. and Israel urging Iranian citizens to seize the opportunity to overthrow the regime.

Iran has launched retaliatory strikes against U.S. bases in the Middle East region. Four U.S. service members died as part of the conflict, according to U.S. Central Command.

U.S. Defense Secretary Pete Hegseth said on Monday that more American casualties should be expected. “War is hell,” Hegseth said. Air Force Gen. Dan Caine, chairman of the Joint Chiefs of Staff, reiterated at a briefing that it won’t be a “single overnight operation” and there will be “additional losses.”

Oil prices continued to surge on Monday as traders feared a major supply disruption through the Strait of Hormuz. International benchmark Brent crude prices hit a new 52-week high and were last up nearly 6%.

U.S. stocks tumbled on Monday and Asia-Pacific markets also slumped, with airline stocks seeing sharp losses amid Middle East airspace disruptions and airport closures.

The large-scale U.S. and Israeli assault was launched on Saturday after Iran refused U.S. demands to curb its nuclear program, and another round of talks, held last Thursday, ended without a deal.

Live updates: Iran security chief Ali Larijani rejects U.S. talks, blames Trump for ‘chaos’

Iran conflict: Where things stand, global responses — and what comes next

Airlines cancel hundreds of flights after U.S., Israeli attacks on Iran

Earnings in Europe come from Bank of Ireland Group, Smith & Nephew and Galp Energia, while data releases include German retail sales and Italian GDP figures.

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