Asian Stocks Slide as Middle East Conflict and Rising Oil Prices Shake Global Markets

Asian stock markets were mixed on Friday but remained on track for steep weekly losses as escalating tensions in the Middle East and surging oil prices weighed heavily on investor sentiment across the region. Ongoing geopolitical uncertainty involving Iran, Israel, and the United States has increased concerns about global energy supply disruptions, driving volatility in equities and currencies.

Market participants remained cautious as the conflict entered its seventh day with no clear signs of easing. Investors are particularly worried about potential disruptions in the Strait of Hormuz, a critical maritime route responsible for transporting nearly one-fifth of the world’s oil supply. The risk to energy shipments has pushed crude oil prices sharply higher, with oil gaining more than 15% this week as traders price in possible supply shocks.

The sharp rise in oil prices has pressured Asian equity markets, especially in economies heavily dependent on energy imports. South Korea’s KOSPI index dropped around 1% on Friday and is on pace for a dramatic weekly decline of nearly 12%, marking one of its steepest losses in recent months. Japan’s Nikkei 225 managed to edge up about 0.6% during Friday trading, but the benchmark is still heading for an overall weekly fall of roughly 6%.

In China, both the Shanghai Composite and the CSI 300 indexes are set to post weekly losses exceeding 1%, reflecting broader caution among investors amid global geopolitical risks. Hong Kong’s Hang Seng Index gained about 2% on Friday, although it remains down approximately 3% for the week.

Rising crude prices have also sparked renewed inflation concerns globally. Higher energy costs can quickly translate into broader consumer price pressures, complicating the policy outlook for major central banks such as the U.S. Federal Reserve. Persistent inflation could delay expected interest rate cuts, which has added another layer of uncertainty for global financial markets.

Wall Street futures were largely flat during Asian trading hours after U.S. stock indexes extended their losses overnight due to geopolitical tensions and higher Treasury yields. Investors are closely watching upcoming economic data, particularly the U.S. February nonfarm payrolls report, which may offer further clues about the strength of the U.S. economy and the future direction of interest rates.

Elsewhere in the Asia-Pacific region, India’s Nifty 50 index edged lower and is set to decline about 2% for the week. Australia’s S&P/ASX 200 slipped around 1%, while Singapore’s Straits Times Index traded mostly flat as investors remain cautious amid rising oil prices and ongoing geopolitical uncertainty.