Oil prices rose and Asian equities fell broadly early Monday as the widening conflict in the Middle East squeezed global oil supplies.

Last week, Saudi Arabia shut down a crucial pipeline that can carry up to 7 million barrels of crude following multiple drone attacks from Iraq. That came as Iran-backed Houthi militants seized a key territory in Yemen around the strategic Bab al-Mandeb Strait, giving control of two of the most important shipping chokepoints in the Middle East to Iran and a key ally.

"Signs that the conflict is spreading across the Middle East and impacting oil flows" are pushing up oil prices, ANZ Research analysts said in a note.

Saudi Arabia's crude-oil production fell to its lowest level in more than three decades in August, dropping by 2.3 million barrels a day to 6 million barrels a day, the International Energy Agency said in a report Friday. The kingdom produced around 9.4 million barrels a day on average last year.

Front-month WTI crude oil futures were recently up 2.7% at $102.78 a barrel, while Brent crude oil climbed 2.9% to $107.67 a barrel, according to ICE data.

Investors are focusing on the Federal Reserve's rate decision this week after data Friday showed that inflation in the U.S. rose 3.4% in August, with the key core prices coming in higher than expectations.

Analysts have priced in an around 90% chance of a hike after a hawkish Jackson Hole Speech by Fed chairman Chair Warsh and the elevated pressure from energy prices.

"We still think raising rates may end up being a policy error, but at the same time, doing nothing will be problematic given Warsh's repeated view that "inflation is a choice," MUFG analysts said in a note.

Asian equities were broadly lower in early trading. South Korea's Kospi fell 2.9% and Japan's Nikkei Stock Average tumbled 1.5%. Taiwan's Taiex fell 1.65% and Hong Kong's Hang Seng Index edged 0.2% lower.