Brent crude futures, the benchmark for international oils, spiked more than $3 per barrel in London before retreating.
Tokyo’s stock market benchmark fell nearly 2% before recovering some of its losses and Hong Kong’ was off 1%. Shanghai, Australia and Southeast Asian markets also retreated.
“Investors appear to be pricing for an all-out war,” Jingyi Pan of IG said in a report.
The Pentagon said Iran fired more than a dozen missiles at bases in Iraq used by U.S. troops.
President Donald Trump tweeted “All is well!” and that casualty and damage assessments were ongoing, adding “So far, so good!”
Iran’s foreign minister described the missile firings as “proportionate measures in self-defense.”
Financial markets have been on edge about possible U.S.-Iranian conflict and disruption of oil supplies since last week’s killing of Gen. Qassem Soleimani by a U.S. drone in Baghdad.
Brent crude was up 73 cents at $69.02. At the start of Wednesday’s trading, it spiked $3.48 to $71.75 before retreating.
Benchmark U.S. crude was up 61 cents to $63.31 per barrel in electronic trading on the New York Mercantile Exchange. It earlier jumped $2.95 to $65.65 before settling back.
Tokyo’s Nikkei 225 index fell 1.5% to 23,221.08 and Hong Kong’s Hang Seng fell 1% to 28,031.54.
The Shanghai Composite Index lost 1.2% to 3,067.82 and South Korea’s Kospi retreated 1.1% to 3,068.02.
Sydney’s S&P-ASX 200 shed 0.1% to 6,817.60 and India’s Sensex opened down 0.7% at 40,566.78.
Taiwan, New Zealand and Southeast Asian markets also retreated.
Before the latest attack, the rush by investors into safe assets had been abating.
Gold’s momentum eased Tuesday after touching its highest price in nearly seven years.
On Wall Street, the benchmark S&P 500 index lost 0.3% to 3,237.18 in trading that closed before the Iranian attack.
The Dow Jones Industrial Average lost 0.4% to 28,583.68. The Nasdaq composite slipped less than 0.1% to 9,068.58.
In currency markets, the dollar declined to 108.31 yen from Tuesday’s 108.44 yen. The euro was unchanged at $1.1151.