Global markets are breathing easier after a breakthrough in the West Asia conflict, with oil prices plunging sharply and equities rallying across regions as supply risks ease.
Benchmark Brent crude dropped nearly 16 percent to around $92 per barrel, while US crude fell over 16 percent to about $94. The sharp correction follows a conditional two-week ceasefire agreement between the US and Iran, which includes reopening the crucial Strait of Hormuz—one of the world’s most important oil transit routes.
Despite the fall, oil prices remain well above pre-conflict levels of around $70 per barrel seen in late February, reflecting lingering uncertainty and supply disruptions caused by the conflict.
Energy markets had surged in recent weeks after threats to shipping routes and disruptions to oil and gas supplies from the Middle East. The Strait of Hormuz, through which a significant share of global oil flows, had become a major flashpoint.
With the ceasefire in place, more oil tankers are expected to resume passage, easing immediate supply constraints. However, a full recovery in production may take time due to damage to energy infrastructure and the need for sustained geopolitical stability.
The easing of geopolitical tensions triggered a strong rally in equity markets:
Japan’s Nikkei rose about 4.5 percent
South Korea’s Kospi jumped 5.5 percent
Hong Kong’s Hang Seng gained 2.8 percent
Australia’s ASX 200 climbed 2.5 percent
US stock futures also signalled a strong opening for Wall Street, reflecting improved investor sentiment.
Asian economies have borne the brunt of the energy shock, given their heavy dependence on Middle East oil imports.
Countries such as India, Malaysia and the Philippines had been actively negotiating safe passage for their vessels during the conflict. China also continued limited shipments through the strait.
The surge in fuel costs had forced governments and businesses to take emergency measures, including higher fuel prices, supply management, and cost controls.
The Philippines, which imports almost all its oil, declared a national energy emergency in March after petrol prices more than doubled
Airlines across Asia raised fares and cut flights as jet fuel costs surged
Several developing economies faced acute pressure due to limited refining capacity and low reserves
While the ceasefire offers immediate relief to markets, the outlook remains cautious.
Energy production in the region is unlikely to return to normal levels quickly. Even if the truce holds, it could take months for damaged infrastructure to be restored and for supply chains to stabilise.
For now, markets are pricing in reduced risk—but not a complete resolution.