Published on: 2026-03-04
A senior commander from Iran's Revolutionary Guards said Monday that the Strait of Hormuz had been shut and warned that any vessel attempting to transit the waterway would be targeted, Iranian media reported.
National Security Chief Ali Larijani on Monday said the country would not negotiate. The statement directly contradicts remarks made by Trump recently suggesting that Iranian leaders had sought contact.
The Indian Subcontinent would face the most acute disruption, particularly when it comes to supplies of LNG, analysts said. About 60% of India's oil imports come from the Middle East, according to UBP.
"Every 10-dollar sustained rise in oil prices will hit Asia's GDP growth directly by 20-30 (bps)," Morgan Stanley said in a note on Sunday. It came as New Delhi has pledged not to buy oil from Russia.
Washington warned that it will monitor India's Russian oil imports and any attempt to resume purchases could lead to a renewal of punitive tariffs, after the two countries reached an interim deal last month.
Venezuela readies larger oil cargoes, a move that will boost deliveries to India. However, a pivot to US or Venezuelan oil would raise oil import bill as Russian supply is heavily discounted.
India's current account deficit widened in Q3 FY26 on the back of a higher merchandise trade deficit. A worsening situation makes it a harder task to bolster economic recovery.
Even before flare-up between Iran and the US, Modi's ambition to turn India into a global manufacturing superpower is drawing fire from the world's largest economies on a breach of trade rule.
The US imposed preliminary duties of 126% on solar imports from India last week following Beijing's complaint with WTO that India's incentive programmes unfairly favour domestic goods over imports.
iShares India 50 ETF was deep in the red so far in 2026, with the trajectory largely depending on whether government will be able to deliver the target of 4.4% growth against significant headwinds.
China is the world's largest crude oil importer, and purchases over 80% of Iranian oil, according to Kpler. Despite that, stockpiles and alternative supply are expected to offer some buffer in the short term.
The crisis is set to impair manufacturing after losing the sources of cheap oil supply. China's industrial profits rose 0.6% in 2025 from a year earlier, snapping three consecutive years of declines.
Natixis notes that the country is facing surging energy demands because of the rapid rollout of datacentres needed to train AI, a key pillar of China's economic plans for the next five years.
iShares MSCI China ETF dipped to its lowest level since early August. Investors are closely watching the "Two Sessions" for clues on how Beijing intends to achieve its tech ambitions and GDP goal.
Foreigners are fleeing from Asia's hottest markets this year, as exuberance in the AI trade gives way to fears about an oil-driven inflation shock. Japanese and South Korean stocks were among the hardest hit.
The concerns are growing that the euphoric rally in all things AI had run ahead of reality. The caution also spilled into currency markets, with the won and the Taiwan dollar plunging this month.
Goldman Sachs' latest prime brokerage report for the week ended Thursday, showed hedge fund allocations to EM stocks, as a proportion of their total exposure, were near five-year highs.
However, oil prices are unlikely to remain at the current levels, as evidenced by the war in Ukraine. They jumped to three-digits right after Russia's invasion before falling under $60 in 2025.
In this sense, it is just a matter of time before oil markets stabilise given peak demand. On the other hand, the natural gas outlook appears more promising as a cleaner, lower-emission "bridge fuel" in the energy transition.
European natural gas prices surged nearly 40% Tuesday after a production halt at the world's largest LNG export facility in Qatar. The region was already grappling with significantly higher energy costs to China and the US.
With Russia and Iran's iron will, the world's largest trading bloc is put squarely in the crosshairs of rising geopolitical tensions. We see the equities continue to underperform US peers going forward.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
