Asia-Pacific markets opened lower on Friday, as oil prices surged amid renewed concerns that a protracted conflict in the Middle East would further strain energy supplies, raising the specter of a global economic crunch.
Iran’s new Supreme Leader, Mojtaba Khamenei, said in a late Thursday speech that the Strait of Hormuz, one of the key arteries of the world’s oil trade, would remain closed, and Iran could open other fronts in the war if the conflict continues.
Commander of the Iranian Revolutionary Guard Corps Navy, Alireza Tangsiri, also doubled down on the threat in a social media post, warning of “the harshest blows to the aggressor enemy.”
Prediction market Kalshi bettors increased their bets that the U.S economy can fall into a recession this year, with the probability reaching 32 percent, the highest level this year.
International standard Brent crude increased by 9.22 percent to end at $100.46 per barrel on Thursday. This was the first time that Brent had been above $100 since August 2022. The U.S. West Texas Intermediate futures were up 9.72 percent in settling to $95.73.
Rob Thummel, senior portfolio manager at Tortoise Capital, told CNBC’s “Squawk Box Asia” on Friday that oil prices will likely continue to be high in the foreseeable future because investors are factoring in the risk of a long-term Middle East war.
However, he anticipates that prices will weaken towards the end of the year because oil shipments in the Strait of Hormuz are likely to pick up.
He said, “By December, that [oil] supply will be better, will be higher, so if you can make it in December, you will be able to buy oil much cheaper.”
Goldman Sachs analysts projected that Brent would average $98 per barrel in March and April, but it surged 40 percent above the 2025 average before dropping to $71 by the fourth quarter.
Goldman reported that when oil flows through the strait are disrupted during a period of one month, Brent will average higher at $110 in March, then gradually reduce to 76-year end of the year.
U.S President Donald Trump has attempted to play down the increase in oil prices by arguing that the U.S., as the largest oil producer in the world, would benefit from oil prices increasing, although he argues that his priority will be to stop Iranian possession of nuclear armaments.
Treasury Secretary Scott Bessent announced Thursday night that the U.S. would temporarily permit the acquisition of approved Russian crude already at sea to balance energy markets, and characterized the price spike as a “temporary disruption.”
Australia’s S&P/ASX 200 is down 0.3 percent in early Asia trade. Japan’s Nikkei 225 slipped 2 percent while the broad-based Topix fell 1.4 percent. Honda Motor dropped more than 6 percent, the largest drop in the Nikkei, as the automaker predicted its initial annual loss in nearly 70 years.
South Korea’s blue chip Kospi plummeted almost 3 percent, and the small-cap Kosdaq shed nearly 2 percent. The Hang Seng index in Hong Kong dropped by 0.2 percent, and the CSI 300 index in mainland China climbed by 0.3 percent.
Overnight in the U.S., major stock indexes notched closing lows for 2026, with the Dow Jones Industrial Average falling nearly 740 points to settle below 47,000 for the first time this year.
Meanwhile, the S&P 500 fell by 1.5 percent to close at 6,672.62, and the Nasdaq Composite was down by 1.8 percent to close at 22,311.98. Futures based on the 30-stock Dow declined 0.03 percent. S&P 500 futures gained 0.21 percent, while Nasdaq 100 futures added 0.12 percent.
Investors look forward to major inflation data in the U.S. Economists surveyed by Reuters predict that the price index of personal consumption expenditures, which is set to be published on Friday, will have increased 2.9 percent year-on-year in January, and the core index will have increased to 3.1 percent.
