Asian and Pacific equity markets opened lower on Friday after oil surged on renewed fears that a protracted Middle East conflict could choke energy flows. The selloff followed sharp comments from Iran’s new Supreme Leader, Mojtaba Khamenei, and warnings from the commander of the Islamic Revolutionary Guard Corps Navy about potential wider disruptions. Brent crude closed above $100 a barrel for the first time since August 2022, and traders pushed up recession odds in prediction markets as global growth risks rose. Market participants cited possible interruptions to shipments through the Strait of Hormuz and fresh policy moves aimed at stabilizing energy supplies.
Key Takeaways
- Brent crude jumped 9.22% on Thursday to close at $100.46 per barrel; U.S. WTI rose 9.72% to $95.73.
- Kalshi traders raised the probability of a U.S. recession this year to 32%, the highest level recorded so far in 2026.
- Asia-Pacific indices opened mixed to lower: Japan’s Nikkei 225 fell about 2%, Topix down 1.4%, South Korea’s Kospi nearly 3%, and Australia’s S&P/ASX 200 down 0.3%.
- Honda Motor plunged more than 6% after forecasting its first annual loss in almost 70 years, making it the largest drag on the Nikkei.
- Goldman Sachs projects Brent averaging $98 per barrel in March–April before easing toward $71 by Q4; a one-month disruption scenario lifts Brent to an average near $110 in March.
- U.S. Treasury Secretary Scott Bessent said the U.S. would temporarily allow purchase of sanctioned Russian crude already at sea to calm markets.
- U.S. equities closed at lows for 2026 overnight: the Dow fell nearly 740 points, the S&P 500 shed 1.5% to 6,672.62, and the Nasdaq lost 1.8% to 22,311.98.
Background
The current market shock traces to a sharp escalation in rhetoric from Tehran following recent military exchanges in the region. On Thursday, Mojtaba Khamenei said the Strait of Hormuz should remain closed, a statement that raises the prospect of sustained interruptions to a chokepoint that channels roughly a fifth of global seaborne oil. Iran’s Revolutionary Guard Corps, which oversees the country’s strategic naval posture, reiterated threats to broaden military pressure if conflict continues.
Markets are particularly sensitive because the global oil balance was already tight after years of uneven investment and post-pandemic demand recovery. Major banks and investment houses had warned that geopolitical shocks would quickly transmit into higher oil prices and wider financial volatility. Policy responses from producers and consuming countries — from strategic stock releases to temporary exceptions on sanctioned cargoes — are being watched closely for their ability to blunt near-term supply shocks.
Main Event
On Thursday, Brent closed 9.22% higher at $100.46 and U.S. WTI rose 9.72% to $95.73, marking the first Brent close above $100 since August 2022. Asian markets opened Friday with broad weakness as traders priced in a longer conflict scenario and potential supply interruptions through the Strait of Hormuz. Equity pressure was uneven across the region: mainland China’s CSI 300 ticked up 0.3%, Hong Kong’s Hang Seng slipped 0.2%, while Japan and Korea experienced larger declines.
Iranian officials amplified the risk perceptions. In a late speech, Supreme Leader Mojtaba Khamenei urged that the Strait of Hormuz remain closed, and IRGC Navy commander Alireza Tangsiri warned of intensified action against perceived aggressors. Those remarks immediately tightened oil market risk premia and sent investors toward safe-haven assets while prompting sell orders in growth-sensitive stocks.
U.S. policy moves sought to reduce market stress. Treasury Secretary Scott Bessent said the U.S. would temporarily allow the purchase of sanctioned Russian crude already en route to stabilize markets, framing the price spike as a “temporary disruption.” President Donald Trump downplayed long-term harm from higher oil prices, noting the U.S. is a leading producer and reiterating that preventing Iran from obtaining nuclear weapons remains a priority.
Analysis & Implications
Higher oil prices have a direct pass-through to inflation and growth forecasts. Goldman Sachs’ near-term Brent outlook — an average of $98 in March and April, before easing to $71 by Q4 — underscores how analysts are treating the shock as front-loaded but potentially transitory if flows resume. However, a one-month closure scenario would lift March averages nearer to $110, extending downside risk to consumption and corporate margins.
For Asia-Pacific economies, the impact varies. Net oil importers such as Japan and South Korea face immediate cost pressures that can subtract from consumer spending or squeeze corporate profits, contributing to equity market weakness. Commodity-exporting or energy-producing economies could see fiscal relief or stronger current-account positions, but global demand destruction from higher prices remains a key downside risk.
Financial markets are also pricing in higher recession probability: prediction markets pushed U.S. recession odds to 32%, and U.S. equities closed at 2026 lows overnight. Elevated volatility could prompt central banks and governments to calibrate policy responses that balance inflation control with growth support, complicating the policy outlook ahead of key data releases, including the U.S. personal consumption expenditures price index.
Comparison & Data
| Series | Thursday Close / Move |
|---|---|
| Brent crude | $100.46 (+9.22%) |
| WTI | $95.73 (+9.72%) |
| Dow Jones | fell ~740 pts (below 47,000) |
| S&P 500 | 6,672.62 (-1.5%) |
| Nasdaq Composite | 22,311.98 (-1.8%) |
| Nikkei 225 | ~ -2% |
| Kospi | ~ -3% |
The table above summarizes the immediate market moves referenced in this report. The spike in oil prices represented the largest single-session percentage gain for Brent in recent months and triggered a broad risk-off response in equities, with defensive sectors and safe-haven assets outperforming. Historical comparisons show that oil jumps tied to Middle East disruptions often produce sharp short-term price moves but can reverse if shipping lanes reopen or diplomatic de-escalation occurs.
Reactions & Quotes
Market participants and officials reacted swiftly to the new rhetoric out of Tehran and to U.S. policy steps intended to steady supply.
“The Strait of Hormuz should remain shut,”
Mojtaba Khamenei (Supreme Leader of Iran)
That comment heightened concerns about sustained chokepoint disruption and was followed by military-leaning statements from IRGC leadership, which traders interpreted as increasing the probability of broader supply interruptions.
“Harshest blows to the aggressor enemy,”
Alireza Tangsiri (IRGC Navy commander)
The IRGC statement reinforced the sense among traders that naval activity could escalate, prompting a rise in insurance costs and risk premia for tankers in the region, according to shipping brokers and analysts monitoring the Gulf.
“Oil prices are likely to remain elevated in the near term… by December you will be able to buy oil much cheaper,”
Rob Thummel (Tortoise Capital, cited on CNBC)
Portfolio managers like Thummel framed the shock as transitory: higher prices now, but a pathway back as supply normalizes later in the year — a view that many market participants will test as new data and diplomatic signals arrive.
Unconfirmed
- There is no independently verified report that Iran has physically closed the Strait of Hormuz; statements so far are rhetorical and unconfirmed by third-party observers.
- Claims that oil shipments from specific tankers were attacked overnight remain unverified pending maritime tracking and official confirmation.
Bottom Line
Markets have reacted quickly to heightened geopolitical risk, with oil spiking past $100 and equities moving into a risk-off posture. The immediate outlook hinges on two variables: whether Iranian rhetoric translates into sustained physical disruption of the Strait of Hormuz, and how quickly alternative policy measures — such as temporary exceptions on sanctioned cargoes — can ease immediate supply tightness.
Investors should expect elevated volatility until clear signs of either de-escalation or prolonged disruption appear. For policy makers, the challenge will be to calm markets without encouraging further escalation; for businesses and consumers, higher energy costs could depress activity if prices remain elevated for months.
Sources
- CNBC — news report with market moves and official remarks (news media).
- Reuters — referenced polling and economic data expectations (news agency).
- Goldman Sachs — investment bank research and price scenarios (institutional research).