Equity markets across Asia and Europe faced heavy selling pressure on Thursday as the conflict in the Middle East drove oil prices back above $100. Japan’s Nikkei 225 and South Korea’s Kospi both saw significant drops as investors reacted to news of Iranian strikes on merchant shipping and fuel depots. The escalating violence has raised the cost of energy and heightened the risk of a global economic slowdown.
The catalyst for the market rout was a 9% surge in Brent crude, which hit $100.29 a barrel despite a historic intervention by the International Energy Agency. Investors were particularly rattled by reports of drone strikes on Omani ports and the closure of Iraqi oil terminals. These developments suggest that the conflict is no longer confined to military targets but is now a full-scale assault on the global energy supply chain.
At the heart of the crisis is the Strait of Hormuz, where the “artery of global trade” has been effectively severed. With 20% of the world’s seaborne energy passing through this narrow waterway, the current blockade is creating a massive supply vacuum. The human cost is also becoming evident, with search and rescue efforts underway for crew members trapped on damaged vessels in the region.
The economic implications are severe, with market strategists warning of a “broader stagflationary shock” that could hinder growth for years. As oil prices climbed from $60 to $100 in just a few months, the pressure on manufacturing and transportation sectors has become unsustainable. This has led to a second day of gains for natural gas prices, further squeezing energy consumers in Europe and beyond.
Government leaders are attempting to project a sense of control, with the U.S. pledging to release 172 million barrels of oil from its own reserves. Energy Secretary Chris Wright accused Iran of threatening the energy security of the West and promised that deliveries would begin shortly. Despite these assurances, the prevailing sentiment on trading floors remains one of deep uncertainty as the war shows no signs of cooling.