Black Monday: Asian markets crash as crude spikes past $100/bbl

Asian markets tumbled over 6% today morning as the crude oil price surged past $100 a barrel following escalation in the war between Iran and US-Israel.

The sharp sell-off in risky assets saw Japan’s Nikkei 225 crash 6% below 53,000, while the Topix declined 5.27%. South Korea’s Kospi plummeted nearly 7%, triggering a temporary trading halt for the Kospi 200 futures. In fact, South Korea has seen increased volatility as the benchmark had crashed over 12% to record its worst single-day decline last week as well. Hong Kong Hang Seng index futures, too, indicate a sharply lower opening.

The closure of the Strait of Hormuz has triggered a major oil cut from Middle Eastern oil producers, including Kuwait, and the UAE. Crude oil prices crossed $100 for the first time since 2022. The US West Texas Intermediate crude futures, too, surged over 20% to $109, a level last seen during Russia’s invasion of Ukraine in 2022. The current crisis has been aggravated given that the Strait controls 95% of crude flow from the Middle East.

Indian markets could well open in the red as at $100, the country’s fiscal deficit will dangerously widen, not to mention the cascading impact on inflation and pressure on earnings for India Inc. In fact, veteran investor and market contrarian, Shankar Sharma told Fortune India that: “The bull market is over, both in the US and India. Two years ago, I said we would have zero returns over five years. We have already seen no returns over the past two years."

Founder of GQ FinXRay, which offers AI-powered stock and fund analysis tool, Sharma, who is based out of Dubai, believes the landed cost of oil for India is effectively already at $100 a barrel, thanks to the weak rupee.

Referring to developments, U.S. President Donald Trump said it's a "small price" to pay for the war to take out Iran's nuclear weapons capability. While India sources over 80% of its crude requirement, South Korea and Japan are the world’s fourth- and fifth-biggest importers of crude.

India's annual oil import bill was $137 billion in FY25, thanks to reliance on imports for 88% of its crude oil requirements and 50% of its natural gas needs. A sustained spike to $110–120 per barrel, against a weakening rupee, would put pressure on the current account, the fiscal deficit, and ultimately corporate earnings in ways that the market has not fully priced in. Nifty has already shown nil returns over the past one year and even on a 18-month basis.