Geopolitical Tensions Spike Oil to $122 as Asian Markets Retreat

Asian stock markets closed mostly in the red on Thursday, overwhelmed by a surge in energy prices and escalating geopolitical risks in the Middle East. Brent crude for June delivery climbed to $122 per barrel following reports that the U.S. is considering military action against Iran and seeking international assistance to reopen the Strait of Hormuz. The volatility comes as the U.S. Federal Reserve maintained interest rates in a starkly divided 8-4 vote, the most fragmented decision since 1992. Fed Chair Jerome Powell warned that the current surge in energy prices may not have peaked, suggesting that a prolonged oil shock could significantly complicate the global monetary policy outlook. In Japan, the Nikkei average dropped 1.06% to 59,284.92, while government bond yields reached a 29-year high amid inflation fears. Hong Kong's Hang Seng index fell 1.28% on reports of potential U.S. strikes on Iran. In South Korea, the Kospi declined 1.38%, with Samsung Electronics shares falling 2.4% despite the company reporting record quarterly profits driven by AI memory chip demand. Australia's S&P/ASX 200 dipped 0.24%, highlighted by a 7.8% plunge in Woolworths shares as the retailer warned that rising petrol and war-related costs would impact food segment earnings. Conversely, New Zealand's S&P/NZX-50 rose 1.04% following signals that the Reserve Bank may not need to accelerate rate hikes. Safe-haven assets saw increased demand, with gold trading above $4,600 an ounce. The combination of a potential Iranian port blockade and a hawkish Fed has created a high-volatility environment for global equities and commodities.