Asian markets plunged up to 6% on Monday as surging crude oil prices due to the war in the Middle East lead to a sharp sell-off in risky assets. Oil prices breached $100 per barrel for the first time since 2022.
Japan’s Nikkei 225 tumbled 6.22% and fell below the 53,000 mark for the first time since February 6, while the Topix declined 5.27%.
South Korea’s Kospi cracked 6.68%, triggering a temporary trading halt for the Kospi 200 futures. Last week on Wednesday, a circuit breaker was activated when the benchmark crashed more than 12% to record its worst single-day decline.
Hong Kong Hang Seng index futures indicated a sharply lower opening.
Crude oil prices surged after major Middle Eastern oil producers, including Kuwait, Iran and the United Arab Emirates, cut oil production following the closure of the Strait of Hormuz.
Brent crude oil price jumped 18.03% to $109.40 a barrel, while the US West Texas Intermediate (WTI) crude futures spiked 20.23% to $109.29. Both touched levels not seen since the early months of Russia’s 2022 invasion of Ukraine.
Meanwhile, US President Donald Trump dismissed the spike as a “small price to pay” to eliminate Iran’s nuclear threat.
“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for USA, and World, Safety and Peace,” he wrote on social media Sunday evening Washington time.
Japan is the world’s fifth-biggest importer of crude, with some 95% from the Middle East and around 70% passing through the Strait of Hormuz before the conflict. South Korea is the world’s fourth-largest importer of crude.
US Stocks Futures
US stock futures also plunged on higher crude oil prices. The Dow Jones Industrial Average futures declined over 800 points or 1.75%, while S&P 500 futures fell 1.59%, and Nasdaq-100 futures slipped 1.6%.
(With inputs from agencies)
