Brent crude futures were last up 4.57% on ICE at $96.18 per barrel

Asia-Pacific markets dropped on Thursday as investors grappled with volatile oil prices and escalating tensions linked to the war involving Iran, even after IEA announced an unprecedented release of crude reserves aimed at stabilising energy markets.

Patrick Munnelly, market strategy partner at TickMill, said energy markets remained central to investor sentiment as geopolitical risks intensified.

The surge in oil prices following a tanker attack in Iraqi waters negatively impacted US equity futures and Asian stocks, prolonging the week’s volatility, he said.

The incident highlighted the fragility of Middle Eastern energy infrastructure and stoked fears of escalating tensions in the region, he added.

The intervention came as the International Energy Agency agreed to release 400 million barrels of oil following supply disruptions caused by the war, marking the largest such action in the organisation’s history.

The IEA did not provide a timeline for when the stocks would reach the market.

Despite the announcement, oil prices continued to jump.

Brent crude futures were last up 4.57% on ICE at $96.18 per barrel.

Munnelly said the continued advance in energy prices suggested that “fears of prolonged conflict were overshadowing the temporary relief provided by the largest-ever emergency release of crude reserves by wealthy nations.”

The Nikkei 225 dropped 1.04% to 54,452.96 and the broader Topix shed 1.32% to 3,649.85.

Mainland Chinese markets were also weaker – the Shanghai Composite slid 0.1% to 4,129.10, while the Shenzhen Component declined 0.63% to 14,374.87.

Hang Seng Index dropped 0.7% to close at 25,716.76.

Kospi 100 declined 0.84% to 6,364.74, led lower by SK Holdings, which dropped 6.54%.

Australian equities also pulled back, with the S&P/ASX 200 declining 1.31% to 8,629.00.

New Zealand’s S&P/NZX 50 index shed 0.71% to 13,199.29.

Currency markets showed modest moves.

The dollar eased 0.12% against the yen to trade at JPY 158.76, while it firmed 0.29% on the Aussie to AUD 1.4023 and gained 0.15% against the Kiwi to change hands at NZD 1.6936.