Asian Markets Slip, Oil Hovers Near Highs as Iran Retaliation Fears Grip Investors

Asian equities edged lower and oil prices surged briefly to five-month highs on Monday, as investors closely monitored geopolitical developments following U.S. airstrikes on Iranian nuclear facilities. While markets remained relatively restrained, the threat of Iranian retaliation—particularly over the Strait of Hormuz—kept risk sentiment fragile.

Markets Hold Breath Over Possible Iranian Response

Major Asian indexes slipped as geopolitical anxiety loomed, though the pullback was modest. S&P 500 and Nasdaq futures were down 0.1% and 0.2%, respectively, during Asian hours.

The dollar saw limited safe-haven buying, and there was no strong shift into bonds—suggesting markets are cautious but not yet in full panic mode.

Oil prices, however, continued to reflect concern:

• Brent crude gained 1.4% to $78.07, after spiking as high as $81.40 earlier.

• WTI crude rose 1.4% to $74.88.

The volatility follows U.S. President Donald Trump's statement that the strikes had crippled Iran's nuclear infrastructure. The key concern now is Tehran's potential retaliation and any resulting threat to the Strait of Hormuz, a narrow shipping lane through which one-fifth of the world's oil and gas flows.

Strategic Strait of Hormuz: Flashpoint for Oil Markets

Analysts warn that any disruption—even a partial one—could push oil prices significantly higher:

• JPMorgan: Past regime changes in the region have led to average oil price spikes of 30%.

• CBA's Vivek Dhar: Even selective shipping disruptions could lift Brent oil to $100+.

• Goldman Sachs: A full closure for a month could spike prices to $110/barrel.

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