Asian markets tumbled and oil prices jumped as Trump’s ultimatum to Iran over the Strait of Hormuz heightened Middle East tensions and economic fears
HONG KONG: Asian stock markets plunged and oil prices surged on Monday. The sell-off followed an ultimatum from former US President Donald Trump to Iran over the strategic Strait of Hormuz.
Trump demanded Iran reopen the strait to shipping within 48 hours or face the destruction of its energy infrastructure. He posted on Truth Social that the US would “hit and obliterate” Iranian power plants if Tehran did not comply by the deadline.
Iran responded with its own threat, warning the strait “will be completely closed” if Trump acted. Parliament speaker Mohammad Bagher Ghalibaf warned of retaliatory strikes on regional infrastructure that would cause oil prices to rise “for a long time”.
The key waterway remains effectively closed, choking off a fifth of global oil and gas flows. Brent crude jumped more than 2% to above USD 113, while West Texas Intermediate topped USD 100.
Asian equities bore the brunt of the market turmoil. Seoul’s Kospi plummeted 6.5% and Tokyo’s Nikkei shed 3.5%.
Hong Kong’s Hang Seng Index dropped more than 4%. Markets in Singapore, Taipei, Mumbai, Bangkok, and Manila all fell between 2% and 3%.
The escalating conflict entered its fourth week with no end in sight. Israel’s military said it would expand ground operations in Lebanon against Hezbollah.
A spokesman added the country faced “weeks” more fighting against Iran and the militant group. Israeli strikes continued, with Iranian media reporting explosions in Tehran.
International Energy Agency chief Fatih Birol warned the global economy was under “major threat”. He stated no country would be immune if the crisis continued in this direction.
The energy crisis has also raised fears of surging inflation. This could force central banks to reconsider monetary policy and hike interest rates.
Pepperstone analyst Chris Weston said markets were focused on the deadline and Trump’s next steps. He noted the president had shown credibility in following through with military action when demands were not met.
The prospect of higher borrowing costs hammered non-yielding gold. Bullion fell for an eighth straight day to around USD 4,350 an ounce.
