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Asian markets fell and oil briefly hit 5-month highs after US joined Israel in striking Iranian nuclear sites, intensifying investor fears
File photo of Israel-Iran conflict. (Image: AP)
Asian markets fell sharply while oil prices briefly surged to five-month highs on Monday, as investor anxiety deepened following the United States’ participation in strikes on Iranian nuclear facilities alongside Israel. The escalation in the Middle East stoked fears of a wider regional conflict and heightened concerns over global oil supply disruptions.
Brent crude futures jumped 2.7% to \$79.12 a barrel, while US West Texas Intermediate (WTI) crude climbed 2.8% to \$75.98—both hitting their highest levels since January. The market response reflects increasing worries over potential inflationary pressures and risks to global economic activity.
Asian Markets Sink on Fears of Broader War
Asian equities saw broad-based losses, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 0.5%. Japan’s Nikkei slipped 0.9% amid geopolitical tension. The selloff followed US strikes on three nuclear sites in Iran, which have fueled speculation about a broader war involving regional players.
European markets also opened weaker, with EUROSTOXX 50 futures down 0.7%, FTSE futures off by 0.5%, and Germany’s DAX futures slipping 0.7%. The impact is especially concerning for Europe and Japan, both of which rely heavily on imported oil and liquefied natural gas (LNG). In contrast, the US remains a net energy exporter.
Gold, Dollar, and Treasuries React
In commodities, gold eased 0.1% to \$3,363 an ounce. The US dollar edged up 0.3% against the Japanese yen to 146.48, while the euro dipped 0.3% to \$1.1481. The dollar index strengthened slightly, rising 0.17% to 99.078.
Bond markets showed limited safe-haven demand, with US 10-year Treasury yields rising by 2 basis points to 4.397%, indicating investor hesitation to rush into traditional safety assets.
**Concerns Over Strait of Hormuz Intensify**
Market volatility is expected to persist as concerns mount over a possible Iranian retaliation, especially around the Strait of Hormuz—a vital chokepoint where nearly a quarter of global oil trade and about 20% of global LNG supply passes through. At just 33 km (21 miles) wide at its narrowest, the strait remains a strategic pressure point.
While Tehran has long threatened to close the strait, it has never acted on it. However, Iran’s Press TV reported that the Iranian parliament has approved a measure to block the passage, following the recent US-led strikes.
Analysts Warn of Further Price Spikes
Optimistic observers are hopeful that the latest military action will curtail Iran’s nuclear ambitions or even prompt a regime shift toward a less confrontational government. But analysts warn the fallout could be far more disruptive.
JPMorgan analysts noted that past regime changes in the region have historically triggered oil price spikes of up to 76%, with prices averaging a 30% increase over time.
Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said: “Selective disruptions that scare off oil tankers make more sense than closing the Strait of Hormuz, given Iran’s own exports would be affected too.”
He added that in a scenario where Iran selectively disrupts shipping, “Brent could climb to at least \$100 per barrel.”
Will Oil Surge Hit Indian Markets?
With the US joining the Israel-Iran conflict over the weekend, volatility is expected as global markets reopen, warned Ross Maxwell, Global Strategy Lead at VT Markets.
“We’re likely to see a risk-off sentiment take hold. Oil prices are expected to spike, raising fresh concerns about inflation and its impact on the global economy. Investors may move towards traditional safe-haven assets like gold and the Japanese yen,” Maxwell said.
He added that while defence stocks could see short-term gains, the broader market sentiment is likely to turn negative. Both Wall Street and Dalal Street are expected to open lower.
Maxwell pointed out that India could be particularly vulnerable due to its heavy dependence on oil imports. “Rising oil prices are a serious concern for India’s economy and could weigh heavily on market sentiment here,” he noted.
He cautioned that headline-driven market moves are likely to continue, with investors closely watching for any further responses from Iran, Israel, and now the United States.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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