Kospi, Hang Seng lead Asian Markets lower as oil tops $100 on Iran tensions

Asian markets opened the week on the back foot on Monday as a fresh oil shock renewed the anxieties around the Middle East conflict.

The sell-off signalled a cautious start to the week after US-Iran talks failed over the weekend and Washington moved ahead with a blockade targeting traffic to and from Iranian ports.

Oil jumped more than 7%, sending Brent above $100 a barrel and adding a new layer of inflation and growth worries for import-heavy Asian economies.

Japan, South Korea, Australia, and Hong Kong all traded lower in early dealing, while mainland China was steadier, and South Korea’s small-cap Kosdaq managed to claw back into positive territory.

Oil above $100 puts investors on the defensive

The immediate trigger was the surge in crude after diplomatic efforts between Washington and Tehran failed to produce a deal.

In a potential escalation, President Trump announced that the US would enforce a maritime blockade on vessels entering or leaving Iranian ports from Monday.

While the order stops short of fully shutting the Strait of Hormuz to non-Iran-bound traffic, it has revived the fears of supply disruption.

Japan, Korea and Australia lead regional declines

Japan was among the markets under pressure, with the Nikkei 225 down 0.72% and the broader Topix off 0.20% in morning trade.

In South Korea, the Kospi fell 0.73%, reflecting the broader risk-off mood, though the Kosdaq reversed earlier losses to rise 0.42%.

Australia’s S&P/ASX 200 slipped 0.38%, a measured but clear retreat as investors digested the implications of higher energy costs.

These moves broadly matched the tone seen in US futures, which also turned lower as oil prices surged.

The pattern across these markets was telling.

Export-heavy and energy-sensitive benchmarks struggled, while pockets of selective buying emerged in smaller names, especially in Seoul.

China steadier, but caution still dominates

China offered a more mixed picture.

Mainland stocks were relatively calm, with the CSI300 little changed, while Hong Kong’s Hang Seng index fell 0.71%, pointing to a sharper reaction in the more internationally exposed market.

That split added nuance to the regional picture: Asia’s openness was uneven, not uniformly weak, but the balance of sentiment still leaned cautious.

Investors appeared willing to hold their ground in parts of mainland China even as they pulled back elsewhere.

Asia is starting the week under the shadow of rising oil prices, fragile diplomacy, and renewed doubts about whether the recent easing in Middle East tensions can be sustained.

The next test will come from three places at once: whether crude stays above $100, whether diplomatic channels show any sign of reopening, and whether the weakness in Wall Street futures hardens into a broader global risk retreat.