Asia-Pacific markets faced a significant sell-off on Monday, with major indexes in Japan and South Korea dropping over 5%. This decline came as investors reacted to the escalating conflict in the Middle East, which has now lasted four weeks.
On Saturday, U.S. President Donald Trump threatened to “obliterate” Iran’s power plants if Tehran does not reopen the Strait of Hormuz—a crucial route for global oil transport—within 48 hours. In response, Iran warned it would target energy infrastructure and desalination facilities in the Gulf if the U.S. acted on its threat.
Mohammad Bagher Ghalibaf, Iran’s Parliament speaker, stated that any attacks on Iran’s power plants would lead to immediate strikes on regional energy and oil infrastructure. He remarked that such critical assets would be considered legitimate targets and warned that oil prices could rise significantly as a result.
Ghalibaf escalated his rhetoric on Sunday, indicating that U.S. Treasury holders, who finance the U.S. military budget, would also be considered targets, alongside military bases.
Despite the tensions, crude prices remained relatively stable, with Brent crude falling by 0.25% to $111.97 per barrel, while the West Texas Intermediate saw a 0.6% decrease to $97.64. The gap between Brent and WTI prices reached over $14, marking the largest difference in years and indicating a prolonged oil crisis, according to Chris Verrone, chief market strategist at Strategas Research.
In Japan, the Nikkei 225 index fell nearly 5%, and South Korea’s Kospi plunged by over 6%, prompting a temporary trading suspension. Australian markets also suffered, with the S&P/ASX 200 down by 2.4%.
In the United States, stock futures were mostly unchanged. Major U.S. indices had ended the previous week lower, with the S&P 500 seeing a decline of more than 1.5%.
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