Asian Markets Retreat as Oil Surge Ignites Middle East Tensions

West Texas Intermediate futures rose 1.4% to $86.94 per barrel, while Brent crude reached $91.43. Analysts at Commerzbank noted that the hostilities have effectively erased recent optimism regarding the normalization of shipping through the Strait of Hormuz. With American forces targeting Iranian launch sites and Tehran responding with missile strikes on Jordan, the market is bracing for further supply disruptions.

This climate of uncertainty hit regional indices hard. The Hang Seng dropped 1.0%, and the FTSE Straits Times fell 0.8%, though the Shanghai Composite managed a marginal 0.2% gain. Fixed-income markets faced even steeper pressure: Japan’s 10-year government bond yield surged 5.5 basis points to 2.995%, marking its highest level since 1996. Australian 10-year sovereign debt yields saw a sharper climb of 9 basis points to 5.1620%.

Beyond energy and debt, the broader risk-off sentiment pushed spot gold down 0.4% to $4,431.71 an ounce as traders recalibrate expectations for Federal Reserve policy. ANZ analysts warned that with crude stocks at sea already depleted, the market’s continued reliance on emergency reserves leaves global inventories dangerously vulnerable to further geopolitical shocks.