Global markets sunk as the intensifying Middle East conflict boosted oil prices and deepened worries about inflation ⁠and the ​potential for higher interest rates.

Wall Street futures were in the red after major North American markets closed sharply lower on Friday.

TSX futures followed sentiment lower.

“The war could still go on for many weeks yet and see oil prices rise say to [US]$150 a barrel,” said ​Shane Oliver, head of investment strategy at fund manager AMP. “And the steady destruction of ⁠energy infrastructure means it will take longer to get supply back to normal.”

“It’s also worth noting that past oil ⁠shocks unfolded over many months in terms of the rise in oil prices as the full impact became clearer – it was over about four months in 1973 ​and a year in 1979.”

Overseas, the pan-European STOXX 600 was down 2.12 per cent in morning trading. Britain’s FTSE 100 fell 2.27 per cent, Germany’s DAX declined 2.03 per cent and France’s CAC 40 retreated 1.9 per cent.

In Asia, Japan’s Nikkei closed 3.48 per cent lower, while Hong Kong’s Hang Seng dropped 3.54 per cent.

Oil prices rose after ​Iran’s Revolutionary Guards said they would target ‌Israel’s power plants and those supplying U.S. bases in the Middle East in retaliation against any attack on its electricity sector.

Brent crude futures gained 0.97 per cent to US$113.30 a barrel. West ​Texas Intermediate (WTI) crude traded at US$99.13 a barrel, up 0.92 per cent.

“Oil ​prices are expected to remain stable to higher until ‌it becomes clear whether the U.S. will, in fact, go ahead with attacking Iranian power plants,” said PVM oil analyst Tamas Varga.

“It would draw significant retaliatory measures from Iran, sending prices considerably higher.”

In other commodities, spot gold declined 6.3 per cent to US$4,203.21 an ounce, extending losses into a ninth straight session. ‌U.S. gold ​futures for April delivery dropped ‌8.1 per cent to US$4,205.10.

The Canadian dollar weakened against its U.S. counterpart.

The day range on the loonie was 72.70 US cents to 73.08 US cents in early trading. The Canadian dollar was down about 0.38 per cent against the greenback over the past month.

The U.S. dollar index, which weighs the greenback against a group of currencies, climbed 0.44 per cent to 100.08.

The euro slid 0.68 per cent to US$1.1493. The British pound declined 0.53 per cent to US$1.3269.

In bonds, the yield on the U.S. 10-year note was last up at 4.436 per cent.

An Air Canada Express jet collided with a fire truck while landing at New York’s LaGuardia airport late on Sunday, killing ⁠both pilots, injuring ​dozens and closing the airport, authorities said.

Euro area consumer confidence

10 a.m. ET: U.S. construction spending for January

With Reuters and The Canadian Press