International financial markets fell further this Wednesday, despite an offer by U.S. President Donald Trump to deploy the U.S. Navy to escort oil tankers through the Strait of Hormuz.
Investor reaction came even though the U.S. military stated that “there are no Iranian vessels currently moving” in this strategic maritime corridor.
The conflict in the Middle East has effectively paralyzed the Strait of Hormuz, which was de facto closed by Iran after airstrikes carried out by the United States and Israel over the weekend. The situation has heightened fears of a prolonged energy supply crisis, with immediate consequences for the global economy.
Pressure was particularly felt in Asian markets. In Seoul, trading was temporarily suspended after South Korea’s benchmark index, the KOSPI, dropped by as much as 11.3%, before partially recovering to close down 7.7%.
Meanwhile, in Tokyo, Japan’s Nikkei 225 index fell by 3.9%, reflecting investors’ concerns about the economic consequences of escalating tensions in the region. Analysts warn that if instability in the Strait of Hormuz continues, global markets may face strong volatility in the days ahead.