Australian share market plunges 3.4 per cent as escalating Iran war sends oil soaring
Australian shares have crashed 3.8 per cent on Monday in one of the worst days of the past year, with investors fretting about the impact of soaring oil prices on global economic growth.
Nearly $100 billion has been wiped from Australian shares after the rising damage from the Iran war triggered a record price rise that sent oil rocketing back through $US100 a barrel.
The S&P-ASX200 plunged as as much as 4.5 per cent in one of its worst days since US President Donald Trump’s “Liberation Day” tariffs in April 2025 before clawing back ground to close 2.85 per cent lower at at 8599.0.
The crash mirrored hefty losses across Asia, with a benchmark of Asian shares sliding up to 5.4 per cent. Japan’s market shed 7 per cent and South Korea fell more than 8 per cent.
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By continuing you agree to our Terms and Privacy Policy.Having held out some that the disruption to the world’s oil supplies would be short-lived, investors are now coming to the realisation that the impact could be more protracted, threatening global economic growth.
Oil prices on Monday punched back through $US100 a barrel for the first time since 2022, racing to their highest level since Russia’s invasion of Ukraine, as more Middle East producer curbed production, fuelling fears of a supply crunch.
The spike was influenced by a warning by Qatar’s energy minister, Saad al Kaabi, that the war could “ bring down the economies of the world”
He predicted that all of the Persian Gulf’s oil and LNG producers would shut production within weeks, driving oil to as high as $US150 a barrel. A restart, he told the Financial Times newspaper, would take “weeks to months”.
Oil notched up record rises when trading resumed, benchmark Brent spiking as much as 29 per cent to $US119.50 a barrel, while West Texas Intermediate jumped 31 per cent.
“There’s no standing in front of this freight train,” IG analyst Tony Sycamore said.
“The violent reaction stems from the markets seeing no obvious off-ramp in the escalating Middle East conflict, now a high-stakes stand-off where neither side appears willing to blink first,” he said.
“The risk of more lasting economic damage continues to build by the day.”
Countries such as Kuwait and the United Arab Emirates have started reducing output because their storage is nearly full with the closure of the Strait of Hormuz as a result of the conflict.
President Trump addressed the oil price spike with a late night post on his social media platform Truth Social, saying that the movements were a “very small price to pay” for the US, the world, and peace.
But investors and analysts are worried about a protracted closure of the Strait that chokes oil deliveries to the world and the perceived absence of an exit plan.
“To date, neither White House policy prescriptions nor upbeat television soundbites have alleviated acute market anxiety about the shipping standstill and cascading shut-ins across the region,” RBC Capital Market analysts said.
“We believe that duration will be the determining factor of the ultimate price trajectory for energy,” they said.
“With no clear definition of what winning looks like, it is hard to forecast whether this will be a multi-week or multi-month conflict.
“Given the course of events, it is unclear whether the administration built an exit on its way into this latest military entanglement.”
Energy was the only one of the S&P-ASX200’s sectors to gain ground on Monday.
