Asian shares fell at the start of the week after tensions in the Middle East raised concerns about energy supply. The move followed a 48-hour ultimatum from US President Donald Trump for Iran to fully reopen the Strait of Hormuz. Japan’s Nikkei 225 was down 3.75% near 51,360, Shanghai was down 2.23% near 3,870, and Hong Kong’s Hang Seng was down 3.3% around 24,440. Gift Nifty futures indicated the Nifty 50 could open more than 350 points lower near 22,770.

Markets React To Strait Of Hormuz Risk

Over the weekend, Trump posted on Truth.Social that Iranian energy facilities could face complete destruction if the strait is not reopened within 48 hours. Iran said it would close the Strait of Hormuz indefinitely, Politico reported. Iran also threatened to target US- and Israel-linked energy, IT, and desalination infrastructure in the region, according to Politico. UK Prime Minister Keir Starmer and Trump discussed the strait on Sunday, with both stating it must reopen to resume global shipping. The disruption has added to oil supply risks for Asia. Saudi Aramco cut crude supply to Asian buyers for a second month in April after the US-Israeli war with Iran disrupted trade via the strait. Higher energy prices can raise household costs and company expenses. Many Asian economies rely heavily on imported oil for their energy needs.

Trading Implications From The 2025 Playbook

We saw exactly this scenario play out in early 2025 when the Hormuz Strait conflict caused Asian markets to plummet almost overnight. That event created a clear template, showing us that geopolitical flare-ups in the Middle East now have an immediate and severe impact on energy prices and equities. Any trader who was not prepared for that volatility paid a heavy price. Following the 2025 tensions, WTI crude futures briefly spiked to over $130 a barrel before settling into a new, higher range. As of last week, oil is holding steady around $95 a barrel, significantly above its pre-crisis levels, reflecting a permanent risk premium now priced into the market. This makes long-dated call options on oil a necessary hedge, as any new disruption could send prices soaring again. We should also remember how the Nikkei 225 took nearly six months to recover from the sharp sell-off it experienced in 2025. Today, Asian economies remain incredibly sensitive to energy costs, with Japan’s latest trade data showing a 12% year-over-year increase in the cost of energy imports. Buying put options on Asian index ETFs offers crucial protection against a repeat of this economic shock. The CBOE Volatility Index, or VIX, is another key lesson from the 2025 incident, where it jumped from 18 to over 45 in less than a week. The VIX is currently trading at a nervous 22, indicating that the market has not forgotten how quickly stability can vanish. We should view VIX call spreads as a cost-effective insurance policy against the next unpredictable event. The lasting effect from 2025 is that supply chain diversification is now a major theme, with U.S. LNG exports to Asia having risen by over 15% since the crisis. This has created new derivative opportunities tied to logistics and alternative energy sectors. These are no longer niche plays but essential positions in a world where traditional energy routes can no longer be taken for granted. Create your live VT Markets account and start trading now.

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