On Friday, Asia-Pacific markets experienced a downturn as oil prices surged. This increase was spurred by growing concerns that an ongoing conflict in the Middle East might further strain energy supplies, heightening fears of a potential global economic slowdown.

Mojtaba Khamenei, Iran’s newly appointed Supreme Leader, delivered a speech late Thursday declaring that the Strait of Hormuz—a critical channel for the world’s oil trade—should remain closed. He also hinted at the possibility of Iran escalating the conflict by opening additional battlefronts if hostilities continue.

Echoing these sentiments, Alireza Tangsiri, Commander of the Iranian Revolutionary Guard Corps Navy, issued a stern warning on social media, promising “the harshest blows to the aggressor enemy.”

Meanwhile, participants in the prediction market platform Kalshi increased their bets on the likelihood of a U.S. economic recession occurring this year. The probability has now risen to 32%, marking the highest level of recession concerns seen this year.

International benchmark Brent crude jumped 9.22% to close at $100.46 per barre on Thursday. It was the first time Brent closed above $100 since August 2022. U.S. West Texas Intermediate futures rose 9.72% to settle at $95.73.

U.S. President Donald Trump sought to downplay the rise in oil prices, saying that the U.S., as the world’s largest oil producer, stands to benefit from higher oil prices, while stressing that his priority would be blocking Iran from obtaining nuclear weapons.

Australia’s S&P/ASX 200 tumbled 0.3% in early Asia trade.

Japan’s Nikkei 225 dropped 2% while the broad-based Topix fell 1.4%.  

South Korea’s blue chip Kospi slumped almost 3% and the small-cap Kosdaq shed nearly 2%.

Hong Kong’s Hang Seng index was set to open lower, with futures last trading at 25,467, compared with the index’s previous close of 25,716.76.

Overnight in the U.S., major stock indexes notched closing lows for 2026, with Dow Jones Industrial Average falling nearly 740 points to settle below 47,000 for the first time this year.

The S&P 500 shed 1.5% to end the session at 6,672.62, while the Nasdaq Composite lost 1.8% to close at 22,311.98.

Futures tied to the 30-stock Dow inched down 0.03%. S&P 500 futures advanced 0.21%, while Nasdaq 100 futures added 0.12%.

Investors await key U.S. inflation data. Reuters-polled economists forecast PCE price index, due to be released on Friday, to have risen 2.9% in January, and the core PCE index is expected to have accelerated to 3.1%.