Oil prices extended gains early Tuesday as renewed fighting in the Middle East heightened concerns over global energy supplies, while Asian stock markets posted mixed performances with Tokyo and Seoul recovering from initial declines.
Brent crude advanced more than 2.3% to $85.18 a barrel after surging nearly 10% in the previous session. U.S. benchmark West Texas Intermediate crude also gained 2.5% to $80.15 a barrel.
Although crude prices remain well below their wartime high of almost $120 per barrel, concerns over supply disruptions have intensified amid competing claims by the United States and Iran over control of the Strait of Hormuz.
U.S. stock futures were mixed after Washington carried out additional strikes on Iran, following President Donald Trump's announcement that the United States was "reinstating" a blockade on Iran in the strategic waterway.
The ongoing conflict has disrupted the movement of oil tankers through the Strait of Hormuz, a key shipping route for crude exports from the Persian Gulf, pushing fuel prices higher worldwide.
In regional trading, Japan's Nikkei 225 gained 0.7% to 67,743.50, while South Korea's Kospi also rose 0.7% to 6,856.83.
Shares of SoftBank Group climbed 2.3% after Chairman Masayoshi Son dismissed concerns about an investment bubble in artificial intelligence infrastructure during a company event in Tokyo.
China's Shanghai Composite Index added 1.1% to 3,958.54 after official data showed exports surged 27% year-on-year in June, driven by robust global demand for semiconductors and other technology products linked to AI. Investors are now awaiting China's quarterly economic data, due Wednesday.
Hong Kong's Hang Seng Index edged up 0.3% to 24,301.71, while Australia's S&P/ASX 200 slipped marginally by less than 0.1% to 8,804.70.
On Wall Street, U.S. stocks closed lower Monday. The S&P 500 fell 0.8%, the Dow Jones Industrial Average lost 0.3%, and the Nasdaq Composite dropped 1.6%.
Technology shares, particularly chipmakers, led the declines. Micron Technology fell 4.4%, trimming part of its strong gains this year, while Nvidia lost 3.5%, weighing heavily on the broader market due to its large market value.
Investors remain concerned that enthusiasm surrounding artificial intelligence may have driven stock valuations too high, especially if AI-related investments fail to generate the expected profits and productivity gains.
Market attention is also focused on the latest corporate earnings reports, with Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo scheduled to release quarterly results on Tuesday.
According to FactSet, analysts expect companies in the S&P 500 to post average earnings growth of 23.6% compared with a year earlier, marking a second consecutive quarter of growth exceeding 20% if forecasts prove accurate.
Analysts say strong corporate earnings will be crucial to supporting elevated stock valuations, particularly as major indexes continue to hover near record highs despite increased volatility linked to AI-related stocks.
Higher oil prices could add to inflationary pressures, potentially prompting the U.S. Federal Reserve and other central banks to keep interest rates elevated or raise them further. While higher rates help contain inflation, they can also slow economic growth and weigh on financial markets.
In early currency trading, the U.S. dollar slipped to 162.35 Japanese yen from 162.46 yen, while the euro strengthened slightly to $1.1387 from $1.1382.