The war could stretch weeks longer, pushing oil to $150 a barrel
Four weeks into a widening Gulf conflict, the world's financial markets are absorbing a truth that geopolitics rarely announces gently: the cost of war is not paid only on battlefields. As U.S.-Iran tensions foreclose any near-term resolution and Israel signals weeks more of fighting, Asian equity markets have shed double digits in March alone, oil has surged 55% in a single month, and central banks that once promised relief are now contemplating tightening. The human machinery of global commerce — ships, planes, farms, factories — is being repriced around a single, volatile variable: energy.
- Iran's threat to strike Gulf energy and water infrastructure, paired with Trump's 48-hour ultimatum to reopen the Strait of Hormuz, has transformed diplomatic brinkmanship into a market emergency with no visible exit.
- Japan's Nikkei has lost nearly 14% in March and South Korea's market 12%, as investors across Asia price in a conflict that analysts warn could push oil to $150 a barrel before it subsides.
- Singapore jet fuel is up 175% year-to-date, Asian LNG has climbed 130%, and shipping fuel costs are rising — meaning the inflation is no longer abstract but embedded in the price of moving goods and feeding people.
- Markets have erased all expectations of Federal Reserve rate cuts this year; traders are now pricing in a possible hike, and ten-year U.S. Treasury yields have climbed to an eight-month peak of 4.41%.
- Gold is edging higher, the dollar is holding near 20-month highs against the yen, and the United States — as a net energy exporter — is quietly accumulating a structural advantage over energy-dependent Europe and Asia.
Monday opened with red screens across Asia's trading floors. Japan's Nikkei fell 3.9%, extending its March losses past 13%. South Korea dropped 4.5%, down 12% for the month. The cause was a conflict now four weeks old and showing no sign of resolution: the United States and Iran were exchanging ultimatums, Israel was planning for weeks more of fighting, and the Strait of Hormuz remained effectively closed to shipping.
Iran had threatened to strike the energy and water infrastructure of its Gulf neighbors if the U.S. followed through on a threat to hit Iran's electrical grid. Trump had given Iran 48 hours to reopen the strait. Neither side appeared ready to yield. Analysts at firms like AMP were gaming out scenarios in which oil reached $150 a barrel — a slow-motion shock that, like the crises of 1973 and 1979, could unfold over many months rather than weeks.
The energy numbers were already staggering. Brent crude was up 55% since the start of March. Singapore jet fuel had climbed 175% year-to-date. Asian LNG was up 130%. Bunker fuel for shipping had surged, raising the cost of moving goods across oceans. Fertilizer prices were climbing. The inflation was no longer theoretical — it was being absorbed into the price of nearly everything.
Central banks responded accordingly. Markets wiped out expectations for Federal Reserve rate cuts and began pricing in a possible hike instead. Ten-year U.S. Treasury yields hit an eight-month peak of 4.41%, up 44 basis points since the war began. European and Asian bond yields jumped sharply in the prior week. Higher borrowing costs darkened the outlook for corporate profits just as governments faced mounting pressure to spend more on defense.
The dollar held near a 20-month high against the yen. Gold ticked upward. European futures fell alongside modest declines in U.S. index futures. The United States, as a net energy exporter, held a relative advantage that was growing more valuable by the day. The question hanging over every trading desk was no longer whether the conflict would end soon — but how much would be lost before it did.
Monday morning in Sydney opened to red screens across Asia's trading floors. Japan's Nikkei index fell 3.9%, extending March losses to over 13%. South Korea's market dropped 4.5%, down 12% for the month. The broader Asia-Pacific index outside Japan slipped 1.2%. The trigger was familiar but worsening: the United States and Iran were trading threats that made any near-term resolution to the conflict seem impossible.
Iran had announced it would target the energy and water infrastructure of its Gulf neighbors if President Trump followed through on a threat to strike Iran's electrical grid within 48 hours. Trump, meanwhile, had issued his own ultimatum: Iran had two days to reopen the Strait of Hormuz, the vital waterway now effectively closed to most shipping with no naval protection in sight. The war, already four weeks old, showed no signs of ending. Israel was planning for weeks more of fighting ahead.
Oil markets lurched again. Brent crude finished down 0.2% at $111.90 a barrel, but the monthly picture told the real story: prices were up 55% since the start of March. U.S. crude sat near flat at $98.35. The choppiness masked a deeper anxiety. Shane Oliver, head of investment strategy at fund manager AMP, laid out the scenario analysts were gaming: the conflict could stretch on for many more weeks, potentially pushing oil to $150 a barrel. The steady destruction of energy infrastructure meant recovery would be slow. Past oil shocks, he noted, had unfolded over months—four months in 1973, a full year in 1979. This one was still in its opening act.
The energy shock was reshaping global financial markets in real time. Singapore jet fuel had climbed 175% since the start of the year, hitting multi-decade highs. Asian liquefied natural gas was up 130%. Bunker fuel used in shipping had surged, raising the cost of moving goods across oceans. Fertilizer prices were climbing, which meant food would soon cost more. The inflation was no longer theoretical—it was embedded in the cost of moving things and feeding people.
Central banks had already begun to retreat from their earlier plans. Markets had wiped out expectations for 50 basis points of easing from the Federal Reserve this year. The next move, traders were pricing in, could actually be a rate hike. The hawkish shift was swift and broad. Ten-year U.S. Treasury yields had climbed to an eight-month peak of 4.41%, up 44 basis points since the war began. European and Asian bond yields had jumped double digits in the previous week alone. The cost of borrowing was rising just as governments were facing pressure to spend more on defense.
Higher yields made stocks look expensive. Higher borrowing costs clouded the outlook for corporate profits. Softer consumer demand seemed likely as energy and food prices climbed. The dollar, benefiting from its role as a safe harbor during volatility, held steady against the yen at 159.15, just off a 20-month high. The euro weakened slightly to $1.1555. Gold, which had lost ground the previous week as investors bet on higher rates, ticked up 0.4% to $4,511 an ounce. The U.S., as a net energy exporter, had a relative advantage over Europe and most of Asia, which depended on imports. That advantage was becoming more valuable by the day.
Futures markets in Europe and the United States reflected the same unease. The EUROSTOXX 50 and DAX both fell 1.2%. S&P 500 futures dipped 0.1%, Nasdaq futures 0.2%. The question now was not whether the conflict would end soon, but how much damage would accumulate before it did.
Citações Notáveis
The war could still go on for many weeks yet and see oil prices rise to $150 a barrel, and the steady destruction of energy infrastructure means it will take longer to get supply back to normal.— Shane Oliver, head of investment strategy at AMP
A Conversa do Hearth Outra perspectiva sobre a história
Why did the market fall so sharply on Monday specifically? Was there a single announcement?
It wasn't one thing—it was the realization that the conflict wasn't ending. Iran and the U.S. were escalating threats, and Israel was signaling weeks more of fighting. That closed the door on any hope of a quick resolution.
So the market was pricing in a short war, and then suddenly it wasn't?
Exactly. When you think a disruption lasts weeks instead of days, the math changes completely. Oil at $150 instead of $110 reshapes everything downstream—shipping, food, manufacturing.
The bond yields jumped 44 basis points since the war began. That seems like a lot.
It is. And it happened because central banks can't cut rates when energy is pushing inflation higher. They have to stay tight or even tighten more. That makes borrowing expensive for everyone—governments, companies, people with mortgages.
What about the countries that export oil? Shouldn't they benefit?
They do, but most of Asia doesn't. Japan, South Korea, Singapore—they're all net importers. They pay more for energy and get no offsetting benefit. The U.S. is different. That's why the dollar strengthened.
Is there a scenario where this resolves quickly and markets recover?
There is, but the pricing suggests traders don't believe it's likely. Past oil shocks took months to play out. This one looks like it could too.