Asia-Pacific markets traded lower Monday, as investors weigh a U.S. naval blockade on Iran's ports after talks between Washington and Tehran failed to produce an agreement to end the conflict in the Middle East.
The breakdown of negotiations over the weekend in Islamabad reignited worries that the U.S.-Iran war will last longer than feared, leading to higher oil prices that will continue to strain economies worldwide.
Crude oil prices surged on Sunday after the talks ended without an agreement and the U.S. moved toward a blockade of Iranian port traffic. The West Texas Intermediate jumped 7.07% to $103.40 per barrel as of 03:34 a.m. ET. Brent crude gained 6.79% to $101.67 per barrel.
U.S. President Donald Trump has reportedly weighed resuming airstrikes on Iran, according to the Wall Street Journal. Trump last week agreed to a two-week ceasefire on Tuesday in exchange for Tehran allowing ships to pass through the strait. He had previously threatened to bomb every bridge and power plant in Iran.
Japan's Nikkei 225 ended Monday's session 0.74% lower, while the Topix declined 0.45%. South Korea's Kospi closed the session at 0.86% lower at 5,808.62, while the small-cap Kosdaq gained 0.57% to 1,099.84 in choppy trade. The S&P/ASX 200 fell 0.39% to 8,926.
Mainland China's CSI300 index ended the session on Monday 0.21% higher, while Hong Kong's Hang Seng index was 1.01% lower in afternoon trade.
India's Nifty 50 was last down 1.04%, while the BSE Sensex fell 1.01%.
Overnight on Wall Street, Dow Jones Industrial Average futures dropped by 517 points, or 1.1%. S&P 500 futures lost 1.1% and Nasdaq 100 futures shed 1.2%.
— CNBC's Sarah Min and Spencer Kimball contributed to this report.