European Markets Slip as Oil Climbs Near $100 Amid Middle East Strife

European stocks took a hit on Wednesday as oil prices barreled toward $100 a barrel, throwing fresh fuel on inflation worries and spooking investors. The STOXX 600 slipped 0.4%. Germany’s DAX fell 0.5%, France’s CAC 40 lost 0.6%, and the FTSE 100 in London dipped 0.2%.

Tensions in the Middle East played a big role here. Iranian-backed Houthi forces targeted Saudi cities with new strikes, and there were reports of fighting between U.S. and Iranian forces near the Strait of Hormuz. Add in new trouble around the Bab al-Mandab chokepoint by the Red Sea—key for shipping—and you’ve got traders nervously watching for signs of oil supply disruption.

Brent crude hovered close to $100 a barrel, something we haven’t seen since July. U.S. oil prices—West Texas Intermediate—came just under $95. Maybe unsurprisingly, energy stocks were up, almost 1%, as investors rushed to put their money somewhere safer. But soaring oil prices are reviving worries about inflation, and central banks are still more likely to keep monetary policy tight.

People are pretty sure the European Central Bank will raise interest rates this week. All eyes are also on upcoming U.S. inflation data that’ll shape what the Federal Reserve does next. Analysts warn that if oil stays expensive, the recent progress on cooling inflation could unravel—leaving both consumers and businesses squeezed.

It wasn’t just the energy sector feeling the heat. News from the corporate world was gloomy, too. Shares of Auto1 Group SE tumbled nearly 5% after the CFO resigned, making investors even more skittish in an already touchy market.

This anxiety isn’t limited to Europe. Wall Street turned lower, and Asian markets were all over the place. Over in currency trading, the yen strengthened, and the euro ticked up against the dollar.

Between escalating conflicts, surging oil, and the threat of more rate hikes, investors are bracing for another rough ride.