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Global stock markets dropped sharply on Monday after Donald Trump<\/a> threatened to \u201cobliterate\u201d Iran\u2019s power plants unless the strait of Hormuz is opened.<\/p>\n Stock markets in Asia and Europe slumped at the start of the week. Japan\u2019s Nikkei share index dropping by 3.4%, China\u2019s CSI 300 down 2.8%, and the South Korean Kospi fell 6.5%.<\/p>\n In Europe, Spain\u2019s Ibex was off 1.9%, France\u2019s CAC 40 index declined 1.5%, Germany\u2019s Dax dropped 1.9% and the FTSE 100 fell nearly 1.5%.<\/p>\n The US president said on Saturday that he was giving Iran 48 hours \u2013 until shortly before midnight GMT on Monday \u2013 to open the strait, which carries about a fifth of global oil and liquefied natural gas supplies.<\/p>\n Tehran has said it will \u201cirreversibly destroy\u201d essential infrastructure across the Middle East, including vital water systems, if the US follows through on Trump\u2019s threat.<\/a><\/p>\n Iranian attacks have effectively closed the strait, triggering a global energy crisis that the head of the International Energy Agency, Fatih Birol, has said is equivalent to the combined force of the twin oil shock of the 1970s and the fallout of Russia\u2019s invasion of Ukraine<\/a>.<\/p>\n The global economy is now bracing for much higher oil prices owing to disruption in the strait, with Goldman Sachs forecasting Brent crude, the international benchmark, to average at $85 a barrel this year, up from previous expectations of $77 a barrel. On Monday, oil rose 1.2% at $113.34 a barrel, still short of the record highs of $119.50 a barrel recorded earlier this month.<\/p>\n The UK month-ahead gas prices rose 3.1% at 155p a therm, nearly double their levels before the Iran<\/a> conflict began.<\/p>\n The rise in energy prices has spooked investors, with the price of gold also sliding on Monday. Its spot price fell 5.8% to $4,226.16 an ounce, as the prospect of higher inflation feeds expectations of interest rate hikes. Gold becomes relatively less appealing when interest rates are elevated, as the metal does not pay a yield.<\/p>\n Keir Starmer will hold an emergency Cobra meeting with his top ministers and the Bank of England governor, Andrew Bailey, on Monday, where they will discuss the economic impact of the crisis in Iran. They will also discuss energy security, supply chain resilience and the international response to the war, the Treasury said in a statement.<\/p>\n The conflict in Iran is ramping up pressure on Starmer to announce a support package to help people with their energy bills, which are expected to rise by 20% when an existing price cap covering gas and electricity expires at the end of June<\/a>.<\/p>\n Investors will be watching the bond market closely on Monday, after the 10-year-yield \u2013 the benchmark for Britain\u2019s borrowing costs \u2013 hit 5% last week, the first time since the 2008 financial crisis.<\/a> The rise in the yield came after the Bank\u2019s rate-setting committee voted to leave interest rates unchanged at 3.75% on Thursday<\/a>.<\/p>\n The US dollar, which is normally seen as a safe haven asset during volatile periods, rose slightly on Monday. The dollar index, which measures the greenback against a basket of leading currencies, was up 0.2%.<\/p>\n