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Experts have warned that a prolonged conflict could push global energy prices even higher.
Global oil prices rose as Iran continues to launch strikes across the Middle East in response to ongoing attacks by the US and Israel.
Brent crude, the global benchmark for oil prices, jumped by 10% to touch more than $82 a barrel on Monday after at least three ships were attacked near the Strait of Hormuz at the weekend. Natural gas prices also surged by as much as 25%.
Iran warned vessels not to pass through the crucial waterway in the south of the country, through which about 20% of the world's oil and gas is shipped.
In London, the FTSE 100 stock market index opened nearly 1% down with shares in airlines falling after airspace was closed across the Middle East.
Leading stock markets in Europe sustained bigger drops. In France, the CAC-40 fell by 1.6% while Germany's Dax dropped by 1.7%.
Meanwhile, the price of gold, which is viewed as a safe-haven asset during periods of uncertainty, added 2.3% to $5,395.99 an ounce.
International shipping has almost come to a standstill at the entrance to the Strait of Hormuz, with analysts warning that a prolonged conflict could push energy prices even higher.
The UK Maritime Trade Operations Centre (UKMTO) said that two vessels had been struck, and an "unknown projectile" was reported to have "exploded in very close proximity" to a third.
After its initial surge, Brent crude fell back to $79 a barrel while US-traded oil was up by around 7.6% at $72.20.
"The market isn't panicking", Saul Kavonic, head of energy research at MST Marquee told the BBC. "There is more clarity that so far, oil transport and production infrastructure hasn't been a primary target by any side," he added.
"The market will be watching for signs that traffic through the Strait of Hormuz returns, which would see oil prices subside again."
But some analysts have warned it could go over $100 in the event of a prolonged conflict which could have a knock-on effect on inflation and interest rates.
Robin Mills, chief executive at Dubai-based consultancy Qamar Energy and a former executive at oil giant Shell, said: "The jump in prices will feed through almost immediately because the oil traders are very much following the news too.
"At the moment, oil prices are not particularly high, they are still below where they were even two years ago so we're not in full-blown oil crisis mode yet."
On Sunday, the Opec+ group of oil producing nations agreed to increase their output by 206,000 barrels a day to help cushion any price rises, but some experts doubt this would help much.
Edmund King, president of the AA, warned the disruption could drive up petrol prices around the world.
"The turmoil and bombing across the Middle East will surely be a catalyst to disrupt oil distribution globally, which will inevitably lead to price hikes," he said.
"The magnitude and duration of pump price increases depends on how long the conflict goes on."
Subitha Subramaniam, chief economist and head of investment strategy at Sarasin & Partners, said if oil prices remained high for a sustained period: "It will start to cascade into other prices such as food, agriculture, industrial commodities and that's just going to really bleed into inflation."
The pace of inflation has been easing in the UK, leading to the Bank of England cutting interests.
Subramaniam suggested that the Bank may choose to leave interest rates u
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