Israel and Iran traded heavy air attacks a day after the US struck three main Iranian nuclear facilities, report agencies, stoking global worry over the escalation of Middle East conflicts.
Explosions rock Iran's capital, Tehran, as Israel announces attacks on government and military sites. Iran also sends waves of missiles and drones into Israel, with blasts heard in multiple cities.
Israel carried out a fresh strike on Iran's underground Fordo nuclear site south of Tehran.
The UN's atomic agency chief stated that the US attacks on the Fordow enrichment site were expected to have caused "very significant damage."
Oil prices wobbled and stock markets wavered on Monday as traders awaited Tehran's response to the US strikes. Meanwhile, US President Trump urged for oil prices to be kept down as they fluctuated.
US and European stocks retreated, while Asian equities were mixed. Markets kept a close eye on whether Iran would block the crucial Strait of Hormuz, which carries one-fifth of global oil output.
Meanwhile, The European Union says there are ?indications? that Israel's actions in Gaza are violating human rights obligations in the agreement governing its ties with the EU, according to its findings seen by The Associated Press.
EU foreign policy chief Kaja Kallas presented the review to foreign minsters of the 27-member bloc in Brussels on Monday, leading at least one country to openly propose suspending the agreement.
"There are indications that Israel would be in breach of its human rights obligations under Article 2 of the EU-Israel Association Agreement," according to the review by the EU's diplomatic corps, the European External Action Service.
Suspending ties would require a unanimous decision, which is likely impossible to obtain from countries like Austria, Germany and Hungary that tend to back Israel.
Other actions - such as ending visa-free travel to Europe for Israelis, sanctioning Israeli settlers in the West Bank or halting academic partnerships - could be pushed if a "qualified majority" - 15 of the 27 nations representing at least 65% of the population of the EU - agree.
In another development, White House Press Secretary Karoline Leavitt says Donald Trump was "simply raising a question" when he floated the idea of regime change in Iran, referring to his earlier comments in a Truth Social post.
"If they refuse to engage in diplomacy moving forward, why shouldn't the Iranian people rise up against this brutal terrorist regime? That's a question the president raised last night," she told reporters.
"But as far as far as our military posture, it has not been changed," she adds.
Tehran has given few clues on its response to US attacks on its nuclear sites.
The regime's clerical leaders are facing a perilous choice: hit back at the US and risk widening a war with two militarily superior foes, or return to nuclear talks where they would likely have to make concessions on nuclear enrichment and their ballistic-missile arsenal, two pillars of the country's sovereignty.
The EU urged Iran not to block the Strait of Hormuz, with the US asking China to put pressure on Tehran over the key shipping route
The United Nations nuclear chief has estimated that military attacks by Israel and the United States have inflicted considerable damage to Iran's nuclear facilities.
Rafael Grossi on Monday told an emergency board meeting of the International Atomic Energy Agency (IAEA) - the UN's nuclear watchdog - that craters caused by ground-penetrating US bombs were visible at Fordow, the cornerstone of Iran's nuclear enrichment programme.
Meanwhile in the international oil market, when trading opened on Monday, international benchmark crude contract Brent and US equivalent WTI both jumped more than four percent to hit their highest price since January.
They later dipped briefly into the red and then wobbled, standing up 0.3 percent as Wall Street opened for trading.
"Will Iran choose to choke off the Strait of Hormuz or not? That is the big question," said Bjarne Schieldrop, chief commodities analyst at SEB bank.
But, "looking at the oil price this morning it is clear that the oil market doesn't assign a very high probability of it happening," he added.
Iran is the world's ninth-biggest oil-producing country, exporting just under half of the 3.3 million barrels it produces per day.
The big question is whether Iran is prepared to detonate this economic hand-grenade. Despite threats in the past, including in 2011 as oil sanctions loomed, it has not pulled the pin.
According to a senior European official, the Iranians do not have the means to block the strait "long-term", but they could hamper shipping.
But "it would be a form of suicide to do that," the official said.
"The effect on Israel would be close to zero, the effect on themselves immense, as well as on the United States, Europe and China."
Iranian forces have nearly 200 fast patrol boats that can fire anti-ship missiles or torpedoes, plus mine-laying vessels, according to the International Institute for Strategic Studies.
But the US Fifth Fleet, a major naval force, is stationed across the Gulf in Bahrain, and Iran remains under daily fire from Israeli warplanes and drones.
Iran's own energy exports, in spite of sanctions, remain an important source of income for the world's ninth-biggest oil-producing country.
With United States military bases spread around the Gulf countries to Iran's west, there is no shortage of potential targets.
Kuwait, in a legacy of the 1990 Gulf war, houses about 13,500 US forces, while the biggest US base in the region is Al Udeid in Qatar.
The US Fifth Fleet, covering the Gulf, Red Sea and parts of the Indian Ocean, is based in Bahrain, and about 3,500 US personnel are stationed at Al Dhafra Air Base in the United Arab Emirates.
Increased US involvement in the Iran-Israel war risks attacks "on US interests, US bases and such across the region", said Renad Mansour, senior research fellow at Chatham House.
"The US attack on Iran has now meant that this war is between Israel, the United States and Iran, which means that across the region, Iran may seek to target the US," he added.
However, this option is also fraught for Iran as it risks isolating itself from the powerful Gulf monarchies that enjoy good relations with Washington.
"Tehran is unlikely to strike Gulf Arab states," said Andreas Krieg, a senior lecturer at King's College London.
"Even as it sees the UAE and Saudi Arabia as quiet enablers of the US-Israeli axis, Iran understands that any attack on their soil would likely unify them against it and open the door for greater American military presence.
"Instead, Iran may issue veiled warnings to these states, use regional proxies to pressure them, or engage in cyber or intelligence disruptions targeting their interests -- maintaining plausible deniability while raising the cost of involvement."
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