The ASX closed on a 20-day low as oil prices surged to a six-week high of nearly $US100 per barrel on reports of explosions near Iran's Kharg Island.

Futures point to a flat start for the sharemarket on Monday, but the escalating war in the Middle East is likely to push oil and borrowing costs even higher.

Rising oil prices have worsened worries about the high inflation weighing on consumers and companies with the Reserve Bank under increasing pressure to raise rates.