Asian Markets Retreat as Oil Prices Surge Toward $100 Amid Middle East Tensions

Asian stock markets reversed two days of gains on Thursday as crude oil prices spiked sharply, driven by fresh supply disruptions linked to an escalating conflict in the Middle East. U.S. stock index futures also retreated during Asian trading hours, reflecting growing investor anxiety.

Oil prices jumped more than 7% in early trading after reports emerged that two international tankers were attacked in the northern Persian Gulf near Iraq and Kuwait. Iraqi media attributed the strikes to Iran, intensifying fears that the conflict could disrupt critical energy supply routes. Additional strikes on vessels passing through the Strait of Hormuz — one of the world's most vital oil transit corridors — further stoked the rally. Crude prices climbed back toward $100 per barrel after briefly surging near $120 earlier in the week, with Iran warning that prices could reach $200 per barrel if hostilities continue to escalate.

The spike in energy costs weighed heavily on regional equities. Japan's Nikkei 225 fell 2%, while the broader TOPIX declined 1.6%. South Korea's KOSPI slipped 1.1% and Australia's S&P/ASX 200 dropped 1.7%. Across Greater China, the Shanghai Composite edged 0.2% lower, the CSI 300 fell 0.6%, and Hong Kong's Hang Seng lost 1.1%. Singapore's Straits Times Index dipped 0.3%, while Indian Nifty 50 futures declined 0.7%.

Rising oil prices are reigniting inflation concerns at a time when central banks are already navigating the difficult balance between taming price pressures and sustaining economic growth. Markets are now closely watching Friday's release of the U.S. Personal Consumption Expenditures index — the Federal Reserve's preferred inflation measure — for clearer signals on the direction of monetary policy.

With geopolitical risks mounting and energy markets volatile, investors remain cautious heading into the end of the week.