Live updates: Follow the latest news on US-Iran war
Stocks in Asia tumbled while oil rallied, as Yemen’s Houthis joined the Iran war and a further build-up of US forces in the region stoked concern about prolonged conflict in the region.
Brent, the benchmark for about two third of the world’s oil, rallied another 3.23 per cent to $116.31 at 11.50am UAE time. It is set for a record monthly increase after about a 60 per cent gain in March. West Texas Intermediate also jumped above the $100 per barrel mark. The benchmark for US crude was trading 2.38 per cent higher at 102.01 a barrel.
Houthi forces fired missiles at Israel at the weekend and said they will continue to attack Israeli and US interests in the region, until both cease the aggression against Iran and Tehran-backed militant groups in Lebanon and Iraq.
The involvement of the Houthis raises concerns for commercial shipping and the transport of oil and gas through the Red Sea. The Yemeni rebel group attacked ships and disrupted global trade after Israel launched its military campaign in Gaza in October 2023.
A build-up of US ground troops in the region has also diminished the prospects of peace in the short term. Tehran has accused Washington of seeking negotiations while at the same time planning a ground invasion of Iranian territory.
Seizure of Kharg Island?
In an interview with the Financial Times on Sunday, US President Donald Trump said that even while he is negotiating with Tehran, he wants to “take the oil in Iran” and could opt to take over the crude export hub of Kharg Island.
Such a move would intensify retaliation by Iran, which is already attacking the civil and military infrastructure of its Arab neighbours, accusing them of supporting the US military campaign.
Iran has effectively closed the Strait of Hormuz – the waterway through which a fifth of global oil and gas supplies usually passes – for all but a few ships.
The blockade has trigged a global energy crisis, especially in Asia where most nations rely on oil and gas from the Gulf region for their energy needs.
“It seems that we’re at the point now where rhetoric from Trump has diminishing returns, with participants instead seeking evidence that concrete steps towards de-escalation in the Middle East are being taken, as opposed to ‘Truth Social’ posts kicking the can down the road a little longer," said Michael Brown, senior research strategist at Pepperstone.
Mr Trump’s announcement last week that potential strikes on Iranian power plants were being postponed for an extended period was “self-defeating, as it essentially confirmed an expectation in market participants’ minds that the Strait of Hormuz will remain impassable for that whole period of time”, Mr Brown added.
Equities on the slide
Falling stocks in Asia extended equities' losses from last week, as investors considered the prospects of a ground invasion.
The Washington Post, citing unnamed US officials, reported that the Pentagon is preparing for weeks of ground operations in Iran. The Wall Street Journal has also reported that Mr Trump is contemplating a military operation to seize uranium from Iran.
The renewed market turmoil has also been fuelled by higher hydrocarbon prices that are set to disrupt growth in energy-import dependent economies worldwide.
Japan’s Nikkei slid 3.21 per cent, while Hong Kong's Hang Seng fell 1.21 per cent. The Shanghai Composite Index was marginally higher, while stocks in India slumped 1.67 per cent.
Most stocks in the Gulf region also slid, with Dubai's DFM General Index dropping 0.64 per cent and the main equities measure in Abu Dhabi falling 0.61 per cent.
Qatar's QE Index also slumped 1.01 per cent, while the main stocks gauge in Bahrain retreated 0.35 per cent.
Tadawul All Share Index in the Saudi Arabi, however, bucked the trend along with stocks in Kuwait and and Muscat.
Tadawul was rose 0.27 per cent while benchmark Kuwait index added 0.17 per cent. mian index in Muscat added 1.6 per cent.
Meanwhile, US futures recovered some lost ground on Monday and European equities futures were broadly down. FTSE 100 Index futures were 0.31 per cent lower, while CAC 40 Index in Paris and DAX 30 Futures in Germany were down 1.42 and 2.5 per cent, respectively.
