Asia-Pacific Markets Drop as Iran-U.S. Tensions Push Oil Higher

CNBC reported Thursday that Asia-Pacific markets opened broadly lower as a fresh flare-up between Iran and the United States rattled investor sentiment and pushed crude oil prices sharply higher.

Iran Strike on Kuwait Sparks Regional Alarm

Iranian forces targeted Kuwait International Airport in the early hours of Wednesday. The attack came just one day after U.S. Central Command announced it had intercepted Iranian ballistic missiles and drones. American forces also conducted what the command described as self-defense strikes on Qeshm Island in the Persian Gulf. The sequence of events left markets on edge about further escalation and its effect on energy supplies.

Israeli Prime Minister Benjamin Netanyahu told CNBC in an exclusive interview that both Israel and the U.S. remain prepared to strike Iran if required. He warned Tehran it was “playing with fire,” signaling that diplomatic options are narrowing fast. Those comments added another layer of uncertainty for traders already watching the region closely.

Oil Surges Past $96 on Supply Fears

Energy markets reacted sharply to the news. West Texas Intermediate futures climbed more than 2% to settle at $96.02 per barrel on Wednesday. International benchmark Brent crude rose nearly 2%, closing at $97.81 per barrel. Higher energy costs feed directly into broader inflation readings, a concern that has dogged central banks globally throughout 2025 and into this year.

Asian Benchmarks Follow Wall Street Lower

Japan’s Nikkei 225 dropped 1.74%, pulling back sharply after setting a record high in the prior session. The broader Topix index fell 1.09%. South Korea’s Kospi lost 1.25%, though the small-cap Kosdaq bucked the trend with a gain of nearly 3.83% as trading resumed following a public holiday. Australia’s S&P/ASX 200 declined 1.14%. In China, the CSI 300 edged marginally lower, while Hong Kong’s Hang Seng shed 0.84%.

Wall Street Set the Tone Overnight

U.S. equities finished Wednesday’s session on a weak note, providing a bearish lead for Asian bourses. The Dow Jones Industrial Average shed 620.72 points, or 1.21%, to close at 50,687.07. The S&P 500 fell 0.74% to 7,553.68, and the Nasdaq Composite declined 0.89% to finish at 26,853.98. S&P 500 and Nasdaq 100 futures were both lower in early Asian hours, pointing to continued caution on Wall Street when trading resumes later Thursday.

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