U.S.-Iran Ceasefire Tensions Drag European Shares Lower

European equities sold off Monday as a fragile U.S.-Iran ceasefire came under fresh strain after Washington seized an Iranian cargo ship attempting to breach a U.S. naval blockade. Tehran responded with a direct threat of retaliation, raising the probability of a renewed confrontation that markets had begun to price out. The sequence matters: a ceasefire perceived as holding had allowed risk assets to recover, and any reversal now reintroduces geopolitical risk premium across energy, defense, and broader equity markets. Oil supply disruption risk is the most immediate transmission channel, given Iran's position in Gulf shipping lanes and its capacity to threaten tanker traffic through the Strait of Hormuz. Investors will be watching whether Washington treats the ship seizure as a one-off enforcement action or as the opening of a broader pressure campaign, and whether Tehran's retaliation threat is rhetorical or precedes a concrete escalatory move. Either outcome resets the risk calculus for European markets with significant energy import exposure.