Oil prices rose and Asian equities mostly fell on 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 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 last up 2.3% at $102.32 a barrel, while Brent crude oil climbed 2.1% to $106.78 a barrel, according to ICE data.

If Brent stays above $100 for an extended period, the impact could move well beyond the energy sector and become a broader macroeconomic risk for global equities and financial markets, said Phillip Nova's Priyanka Sachdeva.

Investors are also looking ahead to the Federal Reserve's rate decision this week after data Friday showed that inflation in the U.S. rose 3.4% in August, with 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 Kevin Warsh and 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 mostly lower, with sentiment weighed by concerns over the Middle East, as well as calls by leaders of the world's biggest AI companies for the industry to slow development of the technology.

AI-centric markets led losses in the region, with South Korea's Kospi down 3.2% and Japan's Nikkei Stock Average dropping 0.85%. Taiwan's Taiex ended 0.7% lower. Hong Kong's Hang Seng Index rose 0.5%.