Brent crude oil prices have surged past $100 per barrel for the first time in months, driven by the prolonged military confrontation with Iran that continues to disrupt supply routes and stoke fears of broader regional instability. The price milestone, reached on Friday, marks a significant escalation in energy costs that is now reverberating through global financial markets.
Stocks across Asia fell sharply on Friday, following a broad sell-off on Wall Street triggered by the combination of soaring oil prices, rising borrowing costs, and renewed concerns about the technology industry. Japan's Nikkei 225 dropped more than 2 percent, while South Korea's Kospi and Australia's S&P/ASX 200 also recorded substantial losses. Hong Kong's Hang Seng index declined by 1.8 percent, and China's Shanghai Composite shed 1.5 percent.
The price of Brent crude, the international benchmark, climbed to $100.45 per barrel in early trading, its highest level since late 2024. Analysts attribute the rally to the intensifying conflict between Israel and Iran, which has raised the risk of supply disruptions from the Strait of Hormuz, a critical chokepoint through which about 20 percent of the world's oil passes. The U.S. Energy Information Administration has warned that any sustained closure of the strait could push oil prices above $120 per barrel.
The sell-off in U.S. markets was broad-based, with the S&P 500 falling 2.3 percent and the Nasdaq Composite dropping 3.1 percent, its worst single-day decline in three months. Technology shares were particularly hard hit, as investors reassessed valuations in a higher interest rate environment. The yield on the 10-year U.S. Treasury note rose to 4.85 percent, its highest level since 2007, reflecting expectations that central banks will need to keep borrowing costs elevated to combat inflation fueled by higher energy prices.
Federal Reserve officials have signaled that they are prepared to raise interest rates further if inflation does not show sustained progress toward the 2 percent target. The combination of rising oil prices and tighter monetary policy is squeezing consumers and businesses alike, with gasoline prices in the United States averaging $4.20 per gallon, up 15 percent from a month ago. Higher transportation costs are feeding through to a wide range of goods, from food to manufactured products, adding to the cost-of-living pressures that have been a central political issue in many countries.
The conflict with Iran has also disrupted shipping in the Red Sea and the Gulf of Oman, forcing tankers to take longer and more expensive routes. Insurance premiums for vessels transiting the region have tripled, and some shipping companies have suspended operations in the area entirely. The disruptions are contributing to a tightening of global oil supplies, with the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, already maintaining production cuts of about 2 million barrels per day.
European markets were also under pressure, with the Stoxx 600 index falling 1.5 percent. Germany's DAX and France's CAC 40 both declined by more than 1 percent. The euro weakened against the dollar, making dollar-denominated commodities more expensive for European buyers. The European Central Bank has indicated that it is monitoring the situation closely, with some policymakers expressing concern that the oil price spike could derail the region's fragile economic recovery.
In the technology sector, disappointing earnings reports from major companies have added to the gloom. Shares of several high-profile tech firms fell after reporting weaker-than-expected quarterly results, citing higher input costs and slowing demand. The Nasdaq's decline was led by losses in semiconductor and cloud computing stocks, which have been particularly sensitive to interest rate expectations.
Analysts say the outlook for global markets remains highly uncertain, with the trajectory of oil prices dependent on the evolution of the Iran conflict. Diplomatic efforts to de-escalate the situation have so far yielded little progress, and both sides have signaled a willingness to continue military operations. The International Energy Agency has warned that the world could face its most serious oil supply crisis since the 1973 Arab oil embargo if the conflict widens.
For now, investors are bracing for further volatility. The CBOE Volatility Index, often referred to as Wall Street's fear gauge, rose to 28, its highest level in six months. Safe-haven assets such as gold and the Swiss franc have gained, while cryptocurrencies have also fallen, reflecting a broad risk-off sentiment across financial markets.
