Asian stocks were hit hard on March 9 as the US and Israel’s war on Iran drove up oil prices and worries swirled over the economic fallout from the conflict amid signs tensions are broadening across the Middle East.

South Korea and Japan led falls in the region.

The KOSPI had dropped almost 9% at one point, triggering the Korea Exchange to issue a circuit breaker on trading, before ending the day down 6%. KOSPI heavyweights SK Hynix and Samsung Electronics declined nearly 10% and 8%, respectively.

Japan’s benchmark Nikkei Stock Average tumbled as much as 4,200 points, or 7.6%, to hit a two-month intraday low. The blue chip gauge trimmed some of its losses but ended the day down 2,892.12 points, or 5%, at 52,728.72. In terms of the absolute point drop, that marked the third biggest fall in the index’s history. The broader Topix also declined close to 4%.

Both countries’ stock markets were trading at historic highs before the Iran war erupted. Compared to their February all-time closing highs, South Korean equities have fallen 17% while Japan’s are down 10%.

Other Asian stock markets were also under pressure. Vietnam’s VN Index was down over 6% while Taiwan’s TAIEX and the Philippines’ PSEi were lower by around 5%. Australia’s equity benchmark and Thailand’s SET Index were down by around 3%, and India’s BSE Sensex, Singapore’s STI, and Hong Kong’s Hang Seng Index were lower by about 2%.

The steep selloff came on the back of higher oil prices. US benchmark West Texas Intermediate crude breached USD 110 per barrel, touching its highest level since July 2022. The price of Brent crude, the international benchmark, has also surged, with futures up nearly 20% to over USD 100 per barrel.

Energy prices are continuing to climb as the Iran conflict shows few signs of easing. Vital desalination plants in Iran and Bahrain have reportedly been attacked in what many analysts call a serious escalation that could have a major impact on civilian life and could make it even harder for the region to sustain oil and gas production on which the rest of the world depends.

Countries like South Korea and Japan, who heavily rely on energy imports, are likely to be significantly affected. Oil shipments from the Persian Gulf are currently suspended due to fears that tankers could come under attack from Iran, which occupies the entire northern coast of the key Strait of Hormuz.

In a report on March 5, Kpler’s director of oil and tanker research, Andon Pavlov, pointed out that the closure of the Strait of Hormuz “represents one of the most significant crude oil supply disruptions in modern history” as roughly 16 million barrels per day of petroleum products have stopped flowing through.

“Asia faces a combined reduction in refining throughput of close to three [million barrels per day]” and countries with the highest exposure include South Korea, Thailand and India, he noted.

Japan also imports 95% of its oil from the Middle East, with the UAE and Saudi Arabia its two biggest suppliers.

In the Tokyo market, shares declined across the board, including electronics makers, retailers, tech stocks, and energy-related companies. The risk-off sentiment pushed investors to take profits on tech stocks, which have been enjoying a rally on the back of the artificial intelligence boom.

Shares in oil company Idemitsu Kosan declined almost 3%. In a sign of the broadening repercussions of the war on the Japanese economy, Idemitsu has notified business partners that it may stop domestic ethylene production if the Strait of Hormuz blockage continues to prevent raw material imports. Without ethylene, plastics cannot be churned out, which in turn could hamper production of autos and electronic appliances.

Goldman Sachs strategists warned in a note that there is “the risk of a major correction in the Japanese equities market given the relatively benign market conditions since last April’s Liberation Day-related volatility,” referring to trade tariffs announced in early April by US President Donald Trump.

Since April 2025, Japanese equities have had no major correction, which is “extremely unusual in historical terms,” the investment bank wrote in a note on March 9. “This changed last week however, and we think that these elevated levels of volatility could continue from here until the geopolitical situation in the region becomes clearer.”

The Iran conflict is continuing to unnerve investors. Along with the intensifying attacks, Iran over the weekend chose Mojtaba Khamenei to succeed his father Ayatollah Ali Khamenei, who was killed in the strikes. Mojtaba is known for having close ties to the country’s hardline Islamic Revolutionary Guards Corps.

Currencies were also trading weaker against the dollar on March 9 as investors rushed toward safe-haven assets like the greenback. The Japanese yen depreciated about 0.6% into the range of JPY 158 per USD 1. The Korean won has also fallen near the KRW 1,500 per USD 1 mark.

“Global markets are firmly in risk-off mode,” according to Lloyd Chan, senior currency analyst at MUFG Global Markets Research in Singapore. “Net oil-importing economies in Asia are particularly exposed, with currencies and equity markets likely to face downward pressure.”

“Based on net oil trade balances and dependence on Middle Eastern oil supply, Thailand, [South] Korea, and the Philippines appear especially vulnerable to oil price shocks and potential supply disruptions,” he added.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.