Stocks fall and oil tops $115 as fears over Iran war intensify

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Oil tops $115

Highlights

Brent moved above $115 a barrel, reinforcing fears of a new energy shock.
Nikkei 225 fell 4.5% to 4.7%, while Kospi lost 4.1%, underscoring the scale of the move out of risk assets.
Investors are increasingly bracing for a prolonged conflict, rather than a brief local episode.
U.S. and European futures point to further pressure, suggesting the selloff may spread well beyond the region.

Oil rises as equities lose support

According to Bloomberg, the main market signal on Monday was another jump in oil prices. Brent climbed about 2,9% to around $115.27 to $115.75 a barrel, while US WTI traded above $102. That means Brent has gained about 90% since the start of the year according to the Yahoo Finance report, while other outlets estimate that oil has risen by more than 50% since the start of the conflict itself. The market is clearly pricing in the risk of supply disruptions and a longer lasting energy shock.

Against that backdrop, pressure on Asian equities intensified. Japan Nikkei 225 fell 4.5% to 4.7%, South Korea Kospi lost 4.1%, and the broader regional equity index dropped to its lowest level of the year. Futures on U.S. stock indexes also pointed to a weak open, confirming that the selloff is no longer just a local reaction to events in the Middle East but is turning into a broader reassessment of global growth expectations.

Geopolitics is rewriting the market script

Only a few weeks ago, part of the market still assumed that the conflict would remain limited and short lived. That view is now fading. The Houthis entry as active participants in the conflict forced investors to rewrite the base case: instead of a brief shock, markets are increasingly considering the possibility of a prolonged war that would weigh on both inflation and growth.

Additional unease is being fueled by reports of fresh US troop deployments to the Middle East and by Wall Street Journal reporting that President Donald Trump is considering an operation to seize Irans enriched uranium, although no final decision has been made. For markets, this matters not only as a military risk but also as a factor that could keep energy prices elevated longer than investors expected as recently as mid March.

Energy shock emerges as the next risk to global growth

The main question now is not only how deep the current equity correction may become, but whether the jump in oil will turn into a broader macroeconomic blow.

Brent above $115, a nearly 5% drop in the Nikkei, and a decline of more than 4% in the Kospi suggest that investors have begun to seriously price in the risk of both faster inflation and slower growth.

If the conflict drags on, markets may have to revise expectations for corporate earnings, interest rates, and the resilience of global demand.

In an earlier report, we noted that oil prices fall as Trump extends deadline on Iran energy strikes.

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