Last updated on May 12th, 2026 at 08:24 pm
Asian stock markets reeled on Wednesday as escalating conflict in the Middle East triggered a sharp risk-off wave, forcing South Korea’s exchange to halt trading after double-digit losses.
The benchmark Kospi and the tech-heavy Kosdaq both plunged more than 10% during morning trade in Seoul, activating a circuit breaker and marking their worst session since August 2024, according to Channel News Asia. The selloff quickly spread across the region.
Japan’s Nikkei 225 and TOPIX slid nearly 4%, while Hong Kong’s Hang Seng Index dropped 3%. Mainland China’s Shanghai Composite fell 1.3%, reflecting broad investor anxiety over energy supply disruptions.
Oil dependence fuels Korea’s selloff
Analysts pointed to energy vulnerability as a key driver behind the outsized losses in Seoul. South Korea imports roughly 94% of its oil, with about three-quarters sourced from the Middle East, leaving markets highly sensitive to supply shocks.
*CIRCUIT BREAKER TRIGGERED AFTER S. KOREA’S KOSPI PLUNGES 8%
*KOREA’S KOSPI EXTENDS DROP TO 10% AFTER TRADING RESUMESThe chart shows that the South Korean KOSPI stock index has doubled since last August (green) and has already corrected 17% from Friday’s high (red), including a… pic.twitter.com/WRAQXH8QYE
— Jim Bianco (@biancoresearch) March 4, 2026
Kazuaki Shimada, chief strategist at IwaiCosmo Securities, said investors were dumping outperforming markets such as the Nikkei and Kospi to lock in profits. Meanwhile, Jim Bianco, CEO of Bianco Research, said the heavy oil reliance explains why Korean traders reacted so aggressively.
Thailand, another major oil importer, saw its main exchange tumble 7.8% during the session.
Oil soars as Strait of Hormuz closes
The market panic intensified after Iran threatened oil shipments, and the strategic Strait of Hormuz was closed, raising fears of a prolonged supply squeeze. Brent crude surged 14% to $82 per barrel, while WTI climbed 12% to $75 since airstrikes began on February 28. Iran’s Ministry of Defence Export Center (Mindex) also accepts crypto alongside barter and rials for arms sales to sidestep Western sanctions.
US President Donald Trump said the Navy could escort tankers through the strait if necessary, warning that wars can be “fought forever.”
Crypto markets proved comparatively resilient. Total capitalization dipped just 0.5% to $2.39 trillion, even as roughly $3.2 trillion was wiped from global equities in four days, a shock one researcher described as the worst geopolitical jolt since 1973.
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