Asian Markets Rally as Oil Prices Climb Amid Prolonged Iran Conflict and Global Economic Concerns

By Zoey

Asian stock markets moved higher on Friday as investors reacted positively to modest gains on Wall Street, although rising oil prices and lingering geopolitical tensions in the Middle East continued to cast uncertainty over the global economic outlook.

Trading across the region reflected cautious optimism after a volatile week dominated by concerns surrounding the ongoing conflict involving Iran, disruptions to global energy supplies and fears that elevated inflation could pressure central banks to maintain high interest rates for longer than expected.

Oil prices continued climbing as diplomatic efforts aimed at ending the war involving Iran showed little meaningful progress. Investors remained particularly focused on developments around the Strait of Hormuz, one of the world’s most critical shipping routes for crude oil and liquefied natural gas.

Despite a temporary easing in prices during Thursday’s U.S. trading session, crude markets resumed their upward trend as traders assessed the risks of prolonged supply disruptions. Shipping activity through the strategic waterway remains significantly below levels seen before the conflict erupted in late February, intensifying concerns over tighter energy supplies and rising transportation costs worldwide.

Brent crude, the global benchmark for oil prices, rose 2.3% to $104.97 per barrel. The contract had traded near $70 a barrel before the outbreak of the conflict earlier this year. U.S. benchmark crude also climbed sharply, gaining 1.8% to $98.10 per barrel.

Analysts said financial markets remain highly sensitive to any signs of escalation or diplomatic breakthrough between Washington and Tehran.

Strategists at Dutch banking giant ing.com said investors were continuing to monitor negotiations closely, though uncertainty remains dominant.

“Markets are still searching for signs of progress in a potential deal between the US and Iran,” commodities strategists Warren Patterson and Ewa Manthey wrote in a market note. “While there are signs of optimism, uncertainty reigns.”

The rise in oil prices has added fresh pressure to global bond markets. Earlier this week, government bond yields surged as investors worried that higher energy costs could reignite inflation worldwide, potentially forcing central banks to keep borrowing costs elevated and slowing economic growth.

However, some relief emerged Thursday as Treasury yields eased slightly in the United States, helping stabilize broader financial markets and improve investor sentiment heading into Friday’s Asian session.

On Wall Street, U.S. stocks ended modestly higher. The benchmark S&P 500 gained 0.2% to close at 7,445.72, while the Dow Jones Industrial Average rose 0.6% to 50,285.66. The tech-heavy Nasdaq Composite edged up 0.1% to finish at 26,293.10.

Asian investors followed the positive lead from the United States, with Japan posting some of the strongest gains in the region. Tokyo’s Nikkei 225 surged 2.7% to 63,339.07 after fresh economic data showed Japanese inflation slowed to a four-year low of 1.4% in April.

The weaker inflation reading came despite rising energy prices linked to the Middle East conflict and was interpreted by investors as a sign that the Japanese economy may avoid the severe inflationary pressures affecting other major economies.

South Korea’s Kospi gained 0.4% to close at 7,847.71.

In Hong Kong, the Hang Seng Index advanced 0.9% to 25,612.40, while mainland China’s Shanghai Composite also climbed 0.9% to 4,112.90 as investors continued betting on further stimulus measures from Beijing to support economic growth.

Australia’s S&P/ASX 200 rose 0.4% to 8,657.00, while Taiwan’s Taiex jumped 2.2%, boosted by continued investor enthusiasm surrounding artificial intelligence and semiconductor-related shares.

India’s Sensex added 0.6% as domestic investors largely brushed aside global geopolitical concerns and focused on strong corporate earnings and economic resilience.

In Washington, political tensions surrounding the Iran conflict continued to intensify. Republicans in Congress delayed planned votes on legislation that would have forced President Donald Trump to scale back U.S. military involvement in the conflict.

The U.S. House of Representatives had initially planned to vote Thursday on a war powers resolution introduced by Democratic lawmakers seeking to limit the administration’s military campaign. However, Republican leaders ultimately postponed the vote after concerns emerged that the measure could attract enough bipartisan support to pass.

The political uncertainty added another layer of caution for financial markets already grappling with volatile energy prices and inflation risks.

Meanwhile, investors continued closely monitoring movements in bond and currency markets. The yield on the benchmark U.S. 10-year Treasury note stood at 4.57% early Friday, easing from levels above 4.67% earlier in the week when fears of rising global inflation triggered a broad sell-off in bonds.

Currency markets also reflected shifting investor sentiment. The U.S. dollar strengthened slightly against the Japanese yen, rising to 159.12 yen from 158.98 yen, while the euro slipped to $1.1605 from $1.1619.

Corporate earnings also remained in focus. Shares of Nvidia fell 1.8% despite the chipmaker posting stronger-than-expected quarterly results driven by booming demand for artificial intelligence technology. Some analysts suggested investors had already priced in much of the company’s growth potential following its extraordinary rally over the past year.

Airline stocks rebounded as oil prices temporarily eased during Thursday’s trading. Southwest Airlines gained 2.7%, while American Airlines climbed 4.9%.

Luxury fashion company Ralph Lauren surged 13.9% after reporting quarterly earnings that exceeded Wall Street expectations, supported by strong international demand and resilient consumer spending among wealthier shoppers.

Although financial markets showed signs of stabilization heading into the weekend, analysts warned that continued volatility in oil prices and uncertainty surrounding the Iran conflict could quickly reverse investor optimism if diplomatic progress remains stalled.