Asian stock markets drop as oil rises again

Oil prices surged more than 7% after reports showed that two international oil tankers were attacked in the northern Persian Gulf

Asian stock markets dropped on Thursday after two days of gains, as oil prices surged back near $100 per barrel, with renewed supply disruptions amid a heightened war in the Middle East.

Oil prices surged more than 7% in early trading after reports showed that two international oil tankers were attacked in the northern Persian Gulf.

The strike was reportedly attributed to Iran, raising concerns the war could spread further across key energy routes.

Nikkei 225 declined 2%, while the broader TOPIX index slid 1.6%.

KOSPI shed 1.1%, while Australia’s S&P/ASX 200 index declined 1.7%.

Oil prices were also boosted by reports of further strikes on commercial vessels passing through the Strait of Hormuz, one of the world’s most critical oil transit chokepoints.

The rally in crude came despite efforts by governments and global institutions to stabilize markets. Crude was trading back near $100 per barrel after having surged close to $120 earlier this week.

Iran warned that the world should prepare for oil prices potentially reaching $200 per barrel if the war escalates further.

Investors fear that sustained higher oil prices would fuel inflation fears and complicate the outlook for central banks, which are already grappling with the balance between controlling price pressures and supporting economic growth.

Shanghai Composite index edged 0.2% lower, while Shanghai Shenzhen CSI 300 slipped 0.6%. Hang Seng shed 1.1%.

Straits Times Index edged down 0.3%, while futures tied to Nifty 50 slid 0.7%.

Elsewhere, U.S. investors are now awaiting the release of the personal consumption expenditures price index on Friday for further clues on the future path of monetary policy.