Worst Week for Asian Markets Since Covid as Oil Crisis Bites Deep

Asian financial markets have endured their worst week since the onset of the Covid-19 pandemic as the Iran conflict drives oil prices to their highest levels since April 2024 and raises the prospect of an extended period of energy-driven inflation across the region. Asian economies, which are among the world’s most heavily dependent on oil and gas imports from the Gulf, have been hit with particular severity by a crisis that has sent Brent crude surging more than 25% in a single week.
The region’s dependence on Gulf energy — particularly for oil from Saudi Arabia and the UAE, and LNG from Qatar — makes it extremely sensitive to disruptions in the Strait of Hormuz and broader Gulf energy infrastructure. All three of those supply sources are now under severe stress. Kuwait has already cut production due to storage constraints, Saudi Arabia and the UAE face the same situation within 20 days, and Qatar’s LNG terminal has been damaged by a drone strike.
The storage crisis building in the Gulf is of particular concern to Asian markets. Energy consultants estimate that Saudi Arabia and UAE storage could be exhausted within 20 days, potentially forcing those countries to halt production. Given the weeks required to restart halted output, any production shutdown could keep supply constrained long after the conflict ends — meaning Asian economies would face an extended period of tight energy supplies and high prices.
Qatar’s energy minister has warned of an even worse outcome: continued conflict pushing all Gulf exporters to halt production and oil to $150 a barrel. At that price level, the economic consequences for energy-importing Asian economies would be severe. Import bills would soar, trade deficits would widen, currencies could come under pressure, and inflation would surge — repeating, in amplified form, the economic damage caused by earlier energy price spikes.
The financial market damage has been swift and severe. Asian stock indices recorded their worst weekly performance since 2020, reflecting the region’s particular exposure to the energy crisis. The falls spanned markets from Tokyo and Seoul to Singapore and Sydney, as investors priced in the economic consequences of a sustained high-oil-price environment. The question now being asked across the region’s financial centers is not whether the crisis will cause economic damage, but how much.