Asian markets tumble on Iran conflict and oil supply fears, with South Korea’s KOSPI leading the decline

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Asian stock markets remain under significant pressure as investors grapple with the fallout from U.S. President Donald Trump’s large-scale military strikes on Iran last week, fueling fears of a protracted conflict in the Persian Gulf.

Indices saw sharp declines on Monday. Japan’s Nikkei 225 dropped approximately 5.2%, while South Korea’s KOSPI plummeted 6.2%. Vietnam’s VN-Index retreated by about 5.7%. Other regional markets experienced more moderate losses, with Hong Kong’s Hang Seng Index down roughly 1.8% and India’s NIFTY 50 falling 2.5% during morning trading.

Monday’s sell-off extends a downward trend that began following the U.S. strikes. Since the onset of the conflict, the KOSPI has shed over 16%, while Japan’s Nikkei 225 and Australia’s ASX 200 have declined by approximately 10% and 6%, respectively.

Many Asian economies are heavily dependent on Gulf oil exports, which have been severely disrupted. South Korea imports roughly 70% of its crude oil from the Middle East, a figure that rises to nearly 90% for Japan. On Monday morning, the price of WTI crude briefly climbed above $115 per barrel.

This energy crisis has derailed the momentum of Asia’s tech-heavy growth stocks, which had rallied significantly in the weeks leading up to the conflict. South Korean chipmakers Samsung Electronics and SK Hynix had previously surged due to high memory chip demand, at one point rivaling the combined market value of Alibaba and Tencent.

Both Samsung and SK Hynix have since fallen by approximately 20% since the U.S. military action commenced.

In contrast, China has demonstrated greater stability than its neighbors, supported by long-term energy strategies and substantial oil reserves. The CSI 300 index, covering stocks in Shanghai and Shenzhen, has declined by only 2.3% since the start of the war.

“Should the current Middle East situation persist, China might emerge as a beneficiary as capital rotates out of other Northeast Asian markets,” observed analyst William Bratton in a March 9 report.

U.S. markets have also remained relatively resilient, with the S&P 500 dipping just 2.0% over the past week. As a major oil producer, the U.S. is better insulated from the impact of supply constraints in the Middle East.

Nevertheless, U.S. investors may be beginning to grasp the broader economic consequences of the conflict, as evidenced by S&P 500 futures falling about 1.5% as of 2:00 a.m. Eastern time.

Despite the immediate market retreat, analysts at Goldman Sachs have advised investors to view the KOSPI’s decline against the backdrop of its remarkable 176% gain since April 2025.

“We interpret this pullback as a correction, likely to be succeeded by a recovery to new highs following a period of consolidation,” the firm’s analysts stated in a March 6 report.

Other market experts share the view that equities are likely to recover from the impact of the Iran strikes over the long term.

“We anticipated an immediate risk-off reaction,” said Eli Lee, chief investment strategist at Bank of Singapore. “However, unless there is a sustained oil shock, historical data suggests that geopolitical events generally do not have a lasting negative effect on equity prices.”