South Korea's Kospi index fell 2.3% as Iran's Revolutionary Guard declared the closure of the Strait of Hormuz, triggering a sharp rise in global oil prices and heightened risk aversion across Asian markets. The move intensified fears of a supply disruption in one of the world’s most critical energy chokepoints.
- Iran’s Revolutionary Guard claims closure of the Strait of Hormuz, a critical global oil transit route.
- Brent crude rose to $98.60 (+5.4%), U.S. crude (CL=F) hit $94.20 (+6.1%).
- South Korea’s Kospi dropped 2.3%, leading Asian equities losses.
- VIX surged to 26.8, reflecting heightened market volatility.
- Defense stocks in South Korea saw gains amid regional security concerns.
- Over 20% of global oil trade passes through the Strait of Hormuz.
Asian equities plunged on Monday as Iran's Revolutionary Guard announced it had closed the Strait of Hormuz, a key maritime route for global oil shipments. The announcement sent shockwaves through financial markets, with South Korea's Kospi index leading regional losses, dropping 2.3% to 2,284.70. Japan’s Nikkei 225 and Taiwan’s Taiex also declined, falling 1.7% and 1.5% respectively, as investors reacted to the escalating Middle East tensions. The closure claim pushed Brent crude futures to $98.60 per barrel, a rise of 5.4% in a single session, while U.S. crude (CL=F) climbed to $94.20, up 6.1%. These levels represent the highest since late 2023, reflecting growing concerns over potential supply constraints. The VIX index, a key measure of market volatility, surged to 26.8, its highest since December 2024, signaling a sharp increase in investor anxiety. The defense sector across Asia saw mixed reactions, with South Korean defense contractors such as Hanwha Defense (009830.KS) gaining 4.2% on speculation of increased military preparedness. However, broader market sentiment remained bearish due to the perceived global economic fallout from disrupted energy flows. Energy firms in the region, including Korea Gas Corp (040820.KS), faced downward pressure as hedging costs rose. The event underscores how geopolitical instability in the Middle East continues to exert outsized influence on global commodity and equity markets. With the Strait of Hormuz accounting for roughly 20% of global oil trade, any sustained closure would have severe implications for inflation, shipping costs, and economic growth across Asia and Europe.