Oil concerns and tensions with Iran send Asian markets tumbling, as Korea’s KOSPI suffers the steepest decline

Asian Markets Hit Hard Amid Rising Tensions in the Gulf

Stock markets across Asia have been under significant pressure following large-scale military actions by U.S. President Donald Trump against Iran last week. Investors are increasingly concerned about the possibility of a prolonged conflict in the Persian Gulf and potential turmoil in global energy markets.

Major Indexes Experience Sharp Declines

On Monday, Asian stock indices suffered notable losses. Japan’s Nikkei 225 tumbled approximately 5.2%, while South Korea’s KOSPI dropped 6.2%. Vietnam’s VN-Index also fell by about 5.7%. Other markets in the region saw smaller declines, with Hong Kong’s Hang Seng Index down 1.8% and India’s NIFTY 50 losing 2.5% during morning trading.

The latest sell-off compounds the downward trend that began after the U.S. strikes on Iran. Since the onset of the conflict, the KOSPI has fallen over 16%. Japan’s Nikkei 225 and Australia’s ASX 200 have also declined by roughly 10% and 6%, respectively, during the same period.

Energy Supply Disruptions Amplify Market Stress

Many Asian nations are heavily dependent on oil imports from the Gulf, but shipments have slowed dramatically after Iran effectively shut down the Strait of Hormuz last week. South Korea relies on the Middle East for about 70% of its crude oil, while Japan’s dependence is closer to 90%. On Monday morning, the price of WTI crude oil briefly exceeded $115 per barrel.

Tech Stocks Lose Momentum

The recent energy shock has halted the rally in Asia’s technology and AI-focused stocks that had surged prior to the Gulf conflict. South Korean semiconductor giants Samsung Electronics and SK Hynix previously benefited from soaring demand for memory chips, at one point surpassing the combined market value of Alibaba and Tencent. However, both Samsung and SK Hynix have now seen their shares fall by about 20% since the U.S. strikes began.

China Shows Relative Stability

In contrast to its neighbors, China’s stock market has been less volatile, thanks to its extensive energy reserves and long-term planning. The CSI 300 index, which tracks major stocks in Shanghai and Shenzhen, has declined only 2.3% since the conflict started.

According to William Bratton, an analyst at BNP Paribas, “If the current Middle East situation persists, China could potentially benefit as investors shift away from Northeast Asian markets.”

U.S. Markets Remain Resilient

Meanwhile, the U.S. stock market has remained relatively stable, with the S&P 500 dropping just 2% over the past week. America’s role as a leading oil producer has helped shield its economy from the impact of reduced Middle Eastern oil supplies. However, U.S. investors may be starting to grasp the broader economic consequences of the conflict, as S&P 500 futures were down about 1.5% as of 2:00am Eastern time.

Analysts Predict Eventual Recovery

Despite the recent downturn, analysts at Goldman Sachs encourage investors to view the KOSPI’s losses in the context of its remarkable 176% surge since April 2025.

“We see this pullback as a correction that will likely be followed by a rebound to new highs after a period of consolidation,” Goldman Sachs analysts wrote in a March 6 report.

Other experts share the view that markets are likely to recover from the fallout of the Iran conflict over time.

“We anticipated a swift risk-off reaction from the markets,” said Eli Lee, chief investment strategist at Bank of Singapore, a subsidiary of OCBC. “But unless there is a major oil shock, history suggests that geopolitical events rarely have a lasting negative effect on equity prices.”

This article was first published on Fortune.com.