Asian markets slide as oil prices hold near highs amid Iran tensions
Asian equities slipped on Tuesday, mirroring a pullback on Wall Street after U.S. stocks retreated from recent record highs. Crude oil prices, while easing slightly in early trade, stayed elevated as geopolitical risks surrounding the Strait of Hormuz continued to rattle markets.
Brent crude, the global benchmark, was trading at $112.86 a barrel by midday, down 1.38% from the previous session, while U.S. West Texas Intermediate crude fell 2.27% to $104 per barrel. U.S. futures inched up 0.1%.
The fragile ceasefire between the U.S. and Iran was tested again on Monday after the U.S. military reported sinking six Iranian fast-attack boats that were targeting civilian vessels in the Persian Gulf. Two U.S.-flagged ships successfully navigated the Strait of Hormuz, but the critical waterway for global oil and gas shipments remains largely closed, despite repeated U.S. demands for Iran to reopen it.
“This is a powder keg that keeps getting bigger,” said Michael Torres, a Houston-based energy analyst. “Every time we think the situation might de-escalate, something new happens. The market is pricing in a prolonged disruption, and that’s why oil is staying above $110.”
Meanwhile, trading volumes were thin across Asia, with markets in Japan, South Korea, and mainland China closed for holidays. Hong Kong’s Hang Seng fell 1.1% to 25,805.98, Australia’s S&P/ASX 200 dropped 0.5% to 8,649.80, and Taiwan’s Taiex slipped 0.2% to 40,626.22.
“I’m not surprised to see stocks sliding,” said Priya Kapoor, a portfolio manager in Singapore. “The oil spike is squeezing margins for a lot of industries, and investors are nervous. But honestly, the bigger worry is what happens if the strait stays shut for weeks. That’s not priced in yet.”
“This whole thing is a mess,” said David Chen, a retail investor in Shanghai. “The U.S. keeps talking about freedom of navigation, but meanwhile, my portfolio is bleeding. Oil at $114 is not something you just shrug off. And the politicians? They’re just playing games while ordinary people pay the price.”
Brent crude surged above $114 a barrel on Monday, gaining nearly 6% in a single session. Before the conflict escalated in late February, the benchmark was trading near $70. The U.S. has imposed a sea blockade on Iranian ports and launched “Project Freedom,” an initiative to guide stranded commercial ships through the Strait of Hormuz, which began operations on Monday.
The standoff shows no signs of easing, and analysts warn that any further disruption to oil flows from the Middle East could push prices even higher, adding to inflationary pressures worldwide.