European stocks opened lower on Monday, as investors assessed a flare-up in tensions between the U.S. and Iran which has tempered some hopes for a reopening of tanker traffic through the Strait of Hormuz.

By 03:03 ET (07:03 GMT), the pan-European Stoxx 600 index had fallen by 1.0%, the Dax in Germany had declined by 1.3%, the CAC 40 in France had shed 1.1%, and the FTSE 100 in the U.K. had dipped by 0.4%.

Shares of European luxury groups, which have flagged a hit to sales from the Iran conflict, dropped, as did regional travel and leisure firms who are anticipated to incur increased fuel costs because of the fighting in the Middle East.

The handoff from Asian stocks was mostly strong, albeit in relatively thin trading, with markets retaining muted expectations that the Strait of Hormuz could eventually be unblocked.

“The re-closure of the Strait of Hormuz has taken the wind out of markets’ sails at the start of the week, but investors are still very optimistic – arguably surprisingly so,” said Thomas Mathews, Head of Markets, Asia Pacific at Capital Economics.

The U.S. said it seized an Iranian cargo ship over the weekend, claiming the vessel was attempting to run an American blockade of Iran’s ports and coast. Tehran responded by threatening to retaliate and suggested that it would not be taking part in possible negotiations with the U.S. later this week.

Markets were also keeping close tabs on the Strait of Hormuz, the vital waterway off Iran’s southern coast through which roughly a fifth of the world’s oil flows. Following a series of conflicting statements from Iranian officials in recent days, it has been unclear whether a weekslong closure of the strait had been lifted, or if Iran had once again blocked the bottleneck. Data from Kpler showed more than 20 ships crossed the strait on Saturday, the most since March 1, although Iran has declared that the chokepoint has been shuttered once again.

Oil prices rose on Monday, after having plummeted on Friday on declarations from Iran’s foreign minister and U.S. President Donald Trump that commercial ships were able to transit the strait. By 03:11 ET, Brent crude futures, the global benchmark, had climbed by 5.2% to $95.04 a barrel.

Along with developments in the Iran war, traders were also preparing for a raft of corporate earnings and economic data this week as they attempt to gauge the repercussions of a conflict which began in late February and has sparked worries over slowing global growth.