Australian shares plunged at Monday's close as oil soared amid the escalating conflict in the Middle East.

The S&P/ASX 200 Index plummeted 2.85%, or 252 points, to close at 8,599, a 50-day low.

Oil prices jumped almost 30%, nearing $120 per barrel, in the wake of disruptions in the Strait of Hormuz due to the ongoing Middle East conflict.

On the domestic front, the value of new payment platform transactions in Australia rose nearly 24% to AU$232.3 billion in January, compared with AU$192.1 billion in the same period last year, according to new retail payment figures from the Reserve Bank of Australia. Total card purchases on Australian-issued cards were up 10% to AU$98 billion from AU$89.1 billion in January 2025.

In company news, Dyno Nobel (ASX:DNL) agreed to sell its Phosphate Hill fertilizer business to Mayfair Australia subsidiary Ryowa II GPS for a nominal consideration of AU$1. The sale also involves a deferred consideration of up to AU$100 million, subject to certain conditions and meeting performance hurdles. Shares of the firm fell 10% on market close.

Shares of Karoon Energy jumped 10% while those of Santos (ASX:STO) and Woodside Energy Group (ASX:WDS) rose 2% on market close. Surging oil prices fueled gains in the energy sector despite broader market concerns over inflation and geopolitical tensions in the Middle East.

Lastly, Digico Infrastructure REIT (ASX:DGT) said that Chief Executive Michael Juniper will step away from his duties for an extended period to focus on family and a personal matter. Chris Maher will serve as interim CEO to maintain business continuity. Its shares were down 7% on market close.