The widening conflict in Iran is rattling financial and energy markets worldwide, as tankers in a key shipping corridor are targeted and oil prices surge, threatening to intensify the affordability crunch for U.S. consumers.
Oil prices climbed further on Tuesday after an Iranian official warned that his country would “set fire to anyone who tries to pass through” the Strait of Hormuz, as tensions between Iran, the United States, and Israel continue to escalate.
In afternoon trade in Asia, Brent crude was up around 3.2% at over $80 (£59.67) per barrel, while U.S.-traded oil rose by about 2.6%. Prices had already surged on Monday, amid growing concern over rising energy costs and ahead of a U.S. government announcement on measures to address the spike.
Asian stocks also continued to fall Tuesday as investors assessed the potential economic fallout from the conflict.
Ebrahim Jabbari, an adviser to the Commander-in-Chief of Iran’s Islamic Revolutionary Guard Corps (IRGC), told state television: “Ships should not come to this region. They will certainly face a serious response from us.”
Shipping through the Strait of Hormuz is crucial to the global economy, with roughly 20% of the world’s oil and gas passing through it. Recent attacks on vessels in the region have halted shipments and contributed to rising transportation costs.
The cost of hiring a supertanker to transport oil from the Middle East to China hit an all-time high on Monday, exceeding $400,000 (£298,300), nearly double last week’s rate, according to London Stock Exchange Group data.
Analysts warn that prolonged disruption could push crude prices past $100 per barrel. Srinivaasan Balakrishnan from risk research firm Avellon Intelligence said that if prices remain at current levels, U.S. petrol prices could rise by up to 25 cents per gallon.
U.S. President Donald Trump faces growing concerns that the Middle East conflict could drive up the cost of living. He is scheduled to meet with Treasury Secretary Scott Bessent and Energy Secretary Chris Wright to discuss responses.
Secretary of State Marco Rubio said Washington would announce plans to mitigate rising energy costs. “We knew that going in would be a factor,” Rubio told reporters. “Starting tomorrow, you will see us rolling out phases to try to mitigate against that.”
Major stock exchanges in Asia continued their decline Tuesday amid the uncertainty. Japan’s Nikkei 225 closed 3.3% lower, with export-reliant firms such as Toyota, Panasonic, and Sony among the hardest hit.
Hong Kong’s Hang Seng and the Shanghai Composite in mainland China also fell, while South Korea’s Kospi, which was closed Monday for a public holiday, dropped more than 7%. Seoul’s export-driven economy is particularly vulnerable to geopolitical events, with shares of leading firms Hyundai, Samsung, and chipmaker SK Hynix falling by 10%.
