Asian stock market don enter serious red zone today as wahala between US President Donald Trump and Iran over Strait of Hormuz don escalate pass garri. Trump give Iran 48-hour ultimatum to open the strait wey dem block, or US go strike their power plants. This matter don make oil price jump like frog, and investors for Asia dey run comot from stock market.
For early trading hours, major Asian indices like Nikkei for Japan, Kospi for South Korea, and Hang Seng for Hong Kong all show serious losses. Investors dey fear say the Middle East crisis go affect global oil supply and increase inflation worldwide. As oil price dey rise, cost of goods and services go follow increase, and this one dey worry economies wey dey depend on imported oil.
Oil price don reach levels wey we no see for many years. International benchmark Brent crude futures rise to $113.32 per barrel, while US West Texas Intermediate crude climb to $101.01 per barrel. Goldman Sachs don even raise their oil price forecast, expect say Brent go average $110 for March and April. This one na big jump from their previous prediction of $98.
The main cause of this wahala na the blockade of Strait of Hormuz wey Iran impose since US-Israel launch strikes on February 28. This strait na important waterway wey carry about 20% of global oil supply. If e remain closed, the world go face serious oil shortage. Iran say dem go allow safe passage for all ships except vessels wey belong to their enemies.
Trump talk say if Iran no open the strait within 48 hours, US go “obliterate” their power plants. Iran Parliament spokesperson Mohammad Baqer Qalibaf respond say if US attack Iranian power plants, dem go target critical infrastructure for Gulf region. This kind back-and-forth dey make investors fear say the conflict go escalate more.
Fatih Birol, executive director of International Energy Agency, warn say this Middle East crisis worse pass the two oil shocks for 1970s and even the Russia-Ukraine war effect on gas. IEA member nations don agree to release 400 million barrels of oil from strategic stockpiles to address the supply disruption. But Birol say the real solution na to open Strait of Hormuz.
The difference between Brent crude and US WTI don exceed $14 per barrel, na the biggest gap for many years. This one show say countries outside US dey face more immediate oil supply risk. Amrita Sen, founder of Energy Aspects, talk say US go remain the most shielded region because na the world largest oil producer and dem don start using their strategic petroleum reserves.
Asian currencies don weaken against US dollar as investors dey run from riskier assets. Bond yields for Japan don rise, and other Asian markets dey feel the heat. The situation dey make central banks for the region dey think how dem go manage inflation wey dey come from higher oil prices.
Chris Verrone, chief market strategist at Strategas Research, talk for CNBC say the widening gap between oil benchmarks fit mean say the market dey approach “peak intensity of this oil crisis.” Investors dey bet say the conflict go last longer, and this one dey keep Brent crude prices high.
As the 48-hour ultimatum deadline dey approach for Monday in Washington, all eyes dey on Iran and US to see wetin go happen next. If the strait remain closed, oil prices fit climb pass the 2008 record level of $147 per barrel. This one go bring more inflation pain for economies worldwide, especially for Asia wey heavily depend on imported oil.
The global energy market dey watch this crisis with serious concern. The International Energy Agency dey consult with governments for Asia and Europe about releasing more stockpiled oil if necessary. But everyone know say the permanent solution na to open Strait of Hormuz and reduce tensions between US and Iran.
Do you have a news tip for NNN? Please email us at editor @ nnn.ng
