Asia Stock Markets Slump for Third Day as Global Oil Prices Rise on US-Israel–Iran Tensions

Markets in the Asia-Pacific fell for the third straight session on Wednesday as investors remained cautious, monitoring the escalating conflict between the United States, Israel and Iran. The steepest losses were in South Korea’s Kospi, which slid more than 8% in early trading, followed by Japan’s Nikkei 225 down about 3.6% and Australia’s ASX 200 easing around 1.8%. Brent crude rose around 0.7% in Asia after a sharp rally over the past two days.

The Middle East crisis has unsettled financial markets and driven higher energy prices this week, after several vessels near the Hormuz Strait became targets of attacks. Roughly a fifth of the world’s oil and gas flows pass through the strait, which lies between Iran and the UAE, but traffic has been disrupted nearly to a standstill amid Iran’s threats to burn ships that pass through.

In response to the energy-supply crisis triggered by the war, United States President Donald Trump said the U.S. Navy would protect ships in the region if necessary and would offer shipping-risk insurance to ensure the energy flow remains stable. “The United States will provide insurance at very reasonable prices to all shipping companies in the region to ensure the free flow of energy to the world,” Trump said on Tuesday.

The marked stock-market sell-off has its roots in the weekend airstrikes by the United States and Israel on Iran, with Tehran replying with strikes across the Middle East that disrupted international shipping and commercial flights. The conflict weighs on stocks in export-dependent economies such as Korea and Japan, deemed highly vulnerable to geopolitical shocks that threaten global goods transit routes. (BBC/Z-2)

Indonesian Finance Minister Purbaya Yudhiy Sadewa said Indonesia’s economy remained resilient despite the escalation of tensions between Iran, the United States and Israel. Coordinating Economic Affairs Minister Airlangga Hartarto warned that the rally in crude oil to around 82 dollars per barrel reflected the crisis in the Middle East. Market analyst Hendra Wardana cautioned that the IHSG could weaken further next week amid the Iran–US–Israel escalation. The geopolitical tensions in the Middle East are beginning to affect global energy supply chains.