- Trump issues 48-hour ultimatum to Iran over Hormuz reopening
- Iran threatens retaliation targeting US and Gulf energy infrastructure
- IEA warns crisis worse than 1970s oil shocks, flags supply losses
- USD firms in thin trade; USD/JPY back above 159.50
- Asian FX weak, KRW hits lowest since 2009
- Gold sharply lower, falling below $4,340
- Oil spikes at open, then trades choppy
- Risk sentiment weak; Asian equities sell off broadly
Markets opened the week on edge, dominated by escalating geopolitical tensions following US President Donald Trump’s 48-hour ultimatum to Iran to reopen the Strait of Hormuz or face potential strikes on key infrastructure. The deadline, set to expire Monday evening in New York, has placed markets on high alert for further escalation.
Iran responded forcefully, warning that any US action would trigger retaliatory strikes targeting American and Israeli-linked energy assets across the Gulf, along with desalination pand power plants in its neighboring GCC countries. Officials also reiterated the risk of a prolonged or indefinite closure of the Strait of Hormuz, raising the prospect of a sustained disruption to global oil flows.
The energy shock narrative was reinforced by International Energy Agency chief Fatih Birol, who described the situation as “very severe” and potentially worse than the oil crises of the 1970s. Birol noted that current disruptions are estimated at around 11 million barrels per day, exceeding the combined losses of the two major oil shocks of that era, with some analysts suggesting the figure could be closer to 13 million barrels per day. The IEA is now consulting governments on the potential release of additional strategic oil reserves.
In early trade, the US dollar firmed in thin liquidity conditions, before broader FX markets settled into relatively contained ranges. USD/JPY pushed back above 159.50, while commodity-linked currencies including the AUD and NZD remained under pressure. The Korean won was a notable mover, weakening to its lowest level since March 2009.
Gold came under heavy selling pressure, falling sharply below $4,340 as rising yields and a stronger dollar offset safe-haven demand. Oil prices initially surged on the Globex open, reflecting heightened geopolitical risk, before trading in a more volatile and choppy pattern.
Risk sentiment across Asia remained fragile. Equity markets extended declines, with Japan’s Nikkei 225 falling sharply back below 52,000, Hong Kong’s Hang Seng dropping more than 3%, and China’s Shanghai Composite down over 2%.
