Share markets nosedived in Asia on Monday as the inflationary jolt from surging oil prices threatened to raise living costs and interest rates across the globe, while investors desperate for liquidity fled to the US dollar.
Brent crude soared 27% to US$117.58/barrel, the biggest daily gain since at least 1988, which came on top of a 28% rise last week. US crude shot up a staggering 28% to $116.51, promising to push petrol prices quickly skyward.
Iran named Mojtaba Khamenei to succeed his father Ali Khamenei as supreme leader, signalling that hardliners remained firmly in charge in Tehran a week into its conflict with the US and Israel.
That was unlikely to be welcomed by US President Donald Trump, who had declared the son “unacceptable”.
With no sign of an end to hostilities in the Middle East and tankers still not daring to cross the Strait of Hormuz, investors were bracing for a long stretch of higher energy costs.
“Faced with the worst oil supply shock since the 1970s, all eyes will be on Washington’s response,” said Helima Croft, head of global commodity strategy at RBC Capital Markets. “With no clear definition of what winning looks like, it is hard to forecast whether this will be a multi-week or multi-month conflict.
“To date, neither White House policy prescriptions nor upbeat television soundbites have alleviated acute market anxiety about the shipping standstill and cascading shut-ins across the region.”
Wave of selling
The news was sobering for Japan, a major importer of oil and gas, knocking the Nikkei down 7% on top of a 5.5% drop last week. South Korea’s high-flying market fell closer to Earth with a drop of 8.2%, having already shed more than 10% last week. China is another big oil importer, though it also has a huge stockpile of crude; its blue-chip index fell 1.7%.
China on Monday said inflation had already picked up in February ahead of the current oil spike, with consumer prices rising 1.3% on the year. This is not necessarily a negative development, given the country has long struggled with disinflation.
Read: The biggest thing missing from the state of the nation address
The wave of market selling swept over Wall Street as S&P 500 futures shed 2%, while Nasdaq futures dove 2.3%. In Europe, Eurostoxx 50 futures and DAX futures both slid 3.2%, while FTSE futures dropped 1.4%.
Interest rate futures slipped as investors feared the risk of higher inflation would make it harder for the US Federal Reserve to ease policy, even though disappointing jobs numbers seemed to argue for stimulus. — Wayne Cole, (c) 2026 Reuters
Get breaking news from TechCentral on WhatsApp. Sign up here.
