BANGKOK (AP) — Japan’s benchmark Nikkei 225 index plunged more than 6% in early trading Monday as oil prices surged above $100 a barrel due to disruptions from war in the Middle East, casting a pall over an economy heavily reliant on crude and natural gas imports from the region.
Shortly after trading began, the Nikkei fell 6.2% to 52,184.41 points. South Korea’s Kospi fell 6.1% to 5,180.19 points, while Australian and New Zealand stocks fell more than 3%.
S&P 500 and Dow Jones Industrial Average futures fell 1.9%.
Brent crude oil price per barrel was $109.46 per barrel, and U.S. benchmark crude oil price was $107.37 per barrel. Both are more than 18% higher than Friday’s closing price.
Crude oil prices hit their highest level in three-and-a-half years. Supply concerns have pushed up crude and gasoline prices as the war hobbles major oil producers and hampers exports from the Persian Gulf.
Stephen Innes of SPI Asset Management said in commentary: “The market was woken up by the sound every macro trader fears. The oil alarm bell. This time it wasn’t a polite bell, it was a fire alarm.”
U.S. crude oil prices rose 36% last week and Brent crude oil prices rose 28%. As the war enters its second week, countries and regions critical to the production and transportation of oil and gas in the Persian Gulf are in trouble and oil prices are soaring.
Some analysts and investors say that if oil prices remain above $100 a barrel, it could cause serious damage to the global economy.
The S&P 500 fell 1.3% on Friday after a report showed U.S. employers cut more jobs than they created last month and oil prices surged above $90 a barrel. A combination of economic weakness and high inflation is a worst-case scenario for investors because the Fed doesn’t have the tools to address both problems simultaneously.
The Dow Jones plunged 945 points at one point and eventually fell 453 points, or 0.9%, while the Nasdaq Composite fell 1.6%.
The U.S. dollar rose against other major currencies in early trading on Monday, with the greenback remaining a safe haven for investors coping with uncertainty. The trading price was 158.67 yen, up 0.9% from last Friday’s closing price. The euro fell to $1.1514 against the dollar from $1.1618.
