Asian stock markets have fallen sharply as the threat of a US naval blockade of Iran injects new uncertainty into financial markets. The international benchmark, Brent crude, rose more than 8 percent on Sunday to top $103 a barrel, crossing the psychologically important threshold of $100 for the first time since Tuesday.
The surge in oil prices follows US President Donald Trump's announcement of a naval blockade of Iran, which is set to take effect on Monday at 10am Eastern Time (14:00 GMT). The blockade is a response to the collapse of ceasefire talks between US and Iranian officials over the weekend.
Blockade Details
According to US Central Command, the blockade will only target vessels traveling to and from Iran, and will not impede other traffic. This apparent scaling back of Trump's initial threat has done little to ease concerns about the impact on global oil supplies.
The Strait of Hormuz, which will be affected by the blockade, is a critical conduit for about one-fifth of global oil and natural gas supplies. Iran has already imposed a de facto blockade of the strait, allowing only a limited number of ships to transit the waterway subject to prior vetting and authorization.
Despite a fragile truce officially remaining in place until April 22, only 17 vessels crossed the strait on Saturday, down from roughly 130 daily transits before the war. The reduced traffic has already had a significant impact on oil prices, which have been volatile since US-Israeli strikes on Iran prompted Tehran to impose its own blockade.
Major stock markets in Asia have opened lower on Monday, with Japan's benchmark Nikkei 225 falling 0.9 percent in morning trading, and South Korea's KOSPI dropping more than 1 percent. US stock futures have also fallen, with those tied to the benchmark S&P 500 down about 0.8 percent.
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