The repercussions of the American-Israeli war on Iran are becoming increasingly evident, particularly in several Asian countries, due to disruptions in energy supplies from the Middle East. As trading commenced on Monday, the price of Brent crude oil surged to $115 per barrel, representing a 60% increase from pre-conflict levels.
This price surge has led to a decline in Japan's Nikkei index, as investors expressed concerns over potential oil supply disruptions, prompting a shift towards purchasing the dollar, which negatively impacted the value of the Japanese yen. In this context, the Japanese government announced its readiness to take decisive actions to address the stock market decline, while automotive markets have reduced their production aimed at the region.
Event Details
According to Al Jazeera correspondent in Tokyo, Maha Matsumura, the Japanese Deputy Finance Minister confirmed the government's preparedness to tackle stock market speculation, which has dropped by approximately 2.80%. This decline reflects the fragility of the economic balance amid energy supply disruptions and investor concerns about the widening conflict and its impact on oil supplies.
Earlier today, Japan received a shipment of Saudi crude oil estimated at around 110,000 kiloliters (approximately 690,000 barrels), which arrived via an alternative route to the Strait of Hormuz. Matsumura also reported that Japanese automotive companies' sales to the region reached $15 billion last year, as the automotive manufacturers' union decided to cut production aimed at the Middle East and resort to exporting products via the Cape of Good Hope to avoid risks associated with the Strait of Hormuz.
Background & Context
In China and Hong Kong, stock markets experienced sharp declines at the start of trading today, with the Shanghai index dropping by 1%, and technology companies on the Hong Kong stock exchange facing a 2% decrease due to investor anxiety. The Chinese government is working to support the markets most affected by the war, such as stock exchanges and airlines suffering from rising fuel prices, prompting them to raise ticket prices and cancel some flights.
Steel exporting companies are also reluctant to risk passing through the Strait of Hormuz, despite receiving a green light from Iran for their vessels, according to Al Jazeera's Beijing bureau chief. In Thailand, the government confirmed it is working closely with Iran to ensure the passage of ships stranded in the Strait of Hormuz, carrying essential fertilizers and raw materials.
Impact & Consequences
In Thailand, the Prime Minister announced an agreement with Iran for the passage of stranded ships in the Strait of Hormuz, noting that two vessels have crossed while a third was attacked, with five ships loaded with fertilizers still stuck in the strait. The Thai government has formed a crisis management committee and a team to negotiate with Iran and other countries like Oman to ensure the passage of these vessels, as Thailand imports 95% of the fertilizers necessary for rice cultivation.
The Thai government is seeking alternatives while continuing to support farmers and some essential goods, but prices continue to rise gradually, including transportation costs, which are expected to increase by 10% starting in early April.
Regional Significance
In Pakistan, the crisis is escalating, with the government nearing the implementation of harsher measures to cope with declining energy supplies. The Karachi stock exchange index dropped today by 3,700 points, amid significant investor concerns due to rising oil prices. The government is considering a package of austerity measures, including increasing electricity outage hours.
The government anticipates that electricity cut hours may reach 12 hours in some cities. Additionally, the government may decide to cut liquefied gas supplies to all factories, which would negatively impact the agricultural sector. Under these circumstances, citizens are increasingly anxious about the war's effects on their daily lives.