U.S.-Iran Tensions Rattle Asian Markets as Oil Surges Past $100

Asian stock markets declined sharply on Monday after weekend diplomatic talks between the United States and Iran collapsed without agreement, prompting Washington to announce plans to blockade the Strait of Hormuz. The move escalated an already fragile geopolitical situation now entering its seventh week.

Regional indices tracked steep losses in Wall Street futures, with S&P 500 Futures dropping nearly 1% during Asian trading hours. The renewed conflict fears triggered an 8% surge in Brent crude oil, pushing it back above the $100 per barrel threshold — a level that signals significant economic strain for energy-dependent Asian economies.

South Korea's KOSPI and Japan's Nikkei 225 were the hardest hit, each shedding more than 1%. Japan's TOPIX fell 0.3%, Australia's ASX 200 dropped 0.5%, and Singapore's Straits Times Index declined 0.3%. Hong Kong's Hang Seng slid 1.2%, driven by weakness in the technology sector, while mainland Chinese indices remained relatively steady.

The proposed Hormuz blockade raised fresh concerns about global energy supply chains. Approximately 20% of the world's oil flows through the strait, with Asian nations among the most reliant on that corridor. OCBC analysts warned that equities remain the most vulnerable asset class amid the escalating conflict, noting that bond markets have yet to fully price in the risk.

Last week's gains across Asian markets, fueled by ceasefire optimism, now appear at risk of reversal if tensions continue to mount. A fragile ceasefire remained technically in place Monday morning, with no new strikes reported, but investor confidence stayed shaky.

Meanwhile, Taiwan Semiconductor Manufacturing Company reported first-quarter revenue of T$1.13 trillion, a 35% year-over-year increase that beat analyst estimates, reflecting sustained demand driven by artificial intelligence. Despite the strong results, TSMC shares dipped slightly ahead of its full earnings release later this week.