Oil Prices Near US$120 per Barrel, Largest Surge in Nearly 40 Years

Asian stock markets have come under severe pressure following a sharp rise in global oil prices approaching US$120 per barrel, equivalent to approximately Rp2,028,000 (at an assumed exchange rate of Rp16,900). The surge in energy prices has triggered widespread sell-offs across major regional exchanges at the beginning of the week.

According to CNBC, the oil price increase occurred after several major Middle Eastern producers cut production following the closure of a strategically important energy shipping route in the Gulf region.

This situation has sparked market concerns regarding global energy supply whilst simultaneously heightening uncertainty in financial markets. One of the hardest-hit exchanges is South Korea’s Kospi index.

The benchmark index even triggered a circuit breaker mechanism—a temporary halt to trading—after plummeting more than 8 per cent during Monday morning trading. Trading was suspended for approximately 20 minutes after the index fell sharply at 10:31 local time. In the latest trading session, the Kospi index was down approximately 8.58 per cent.

The sharp decline has also dragged down major technology stocks in South Korea. Samsung Electronics, the semiconductor giant, fell more than 10 per cent, whilst chip manufacturer SK Hynix dropped around 12.3 per cent.

This sharp correction is not the first in recent days. Last week, the Kospi also triggered a circuit breaker after falling more than 12 per cent in a single day, marking one of the worst daily declines in recent times.

The surge in oil prices has been a major factor shaking markets. Brent crude futures contracts surged 26.1 per cent to reach US$116.08 per barrel, equivalent to approximately Rp1,962,752 per barrel. Meanwhile, West Texas Intermediate (WTI) crude oil from the United States also rose 27.6 per cent to US$116.03 per barrel, or approximately Rp1,961,907 per barrel.

This sharp increase is recorded as the largest single-day oil price surge since the late 1980s, according to market data. The surge occurred after several major oil producers in the Middle East, including Iran, Kuwait, and the United Arab Emirates, decided to cut oil production.

This decision was taken following the closure of Strait of Hormuz, a critical global energy distribution route, due to escalating regional conflict. Rising geopolitical tensions are making global markets increasingly cautious about the potential for energy supply disruptions.