STI Plunges 2.3% Amid Iran War Energy Shock Fears

SINGAPORE (Azat TV) – Singapore’s benchmark Straits Times Index (STI) experienced a significant decline on March 4, 2026, falling as much as 2.45 percent amidst a broader Asian market rout. The sharp downturn was primarily driven by mounting fears of an energy shock stemming from an escalating Middle East conflict, specifically the US and Israeli war against Iran, which has sent global oil prices soaring and threatened economic stability across the region.

The STI, a key indicator of Singapore’s market health, shed 120.93 points, or 2.45 percent, before settling at a 2.3 percent loss by midday trading. This marked one of the most volatile trading days for the index this year, reflecting widespread investor panic over the geopolitical tensions and their potential impact on global supply chains and inflation.

Middle East Conflict Triggers Asia-Wide Market Rout

The market turmoil was not isolated to Singapore. Across Asia, stock exchanges witnessed substantial losses as investors reacted to the intensifying conflict in the Middle East. South Korea’s Kospi Index plunged a dramatic 12 percent, leading to a 17-year low for the South Korean won and prompting a 20-minute trading suspension for both Kospi and Kosdaq shares. Japan’s Nikkei index tumbled 4.3 percent, while Hong Kong’s Hang Seng fell 3 percent and Taiwan’s Taiex index lost 3.8 percent. Australia’s ASX 200 was down 1.9 percent, and Shanghai’s CSE 300 Index fell 1.1 percent, underscoring the regional scope of the sell-off.

The sell-off in South Korea was particularly acute among its chip giants, Samsung Electronics and SK Hynix, which had previously fueled the Kospi’s impressive nearly 50 percent gain at its peak in 2026, largely due to the artificial intelligence (AI) boom. However, the threat of surging oil prices now pressured investors to reconsider these overheated equity bets, as South Korea stands as the world’s eighth-largest crude consumer.

Energy Shock Fears Drive Oil Price Surge

At the heart of the market panic were severe energy shock fears. Benchmark Brent crude oil futures surged towards US$82 a barrel on March 4, recording a gain of about 12 percent over two days—the biggest increase since 2020. This spike was exacerbated by reports of significant disruptions to oil infrastructure, including the effective closure of the key Strait of Hormuz route and the shutdown of major fields in Iraq, the second-biggest OPEC producer. European gas prices also jumped approximately 65 percent in just two days, signaling widespread energy market instability.

The rising oil prices fueled concerns about global inflation and the potential for the US Federal Reserve to delay or reverse interest rate easing measures, further clouding the economic outlook. US President Donald Trump announced that the US International Development Finance Corporation would offer insurance to vessels to ensure energy flow, with naval escorts provided “if necessary.” However, analysts like ING Groep expressed skepticism, noting that “Naval escorts will be sitting ducks to Iranian attacks,” suggesting a complex and dangerous maritime environment.

Singaporean Stocks Experience Broad Declines

Within Singapore, the impact was felt across various sectors. Local bank counters, including DBS, OCBC, and UOB, all lost ground, with declines of 1.2 percent to 1.5 percent. National carrier Singapore Airlines saw its shares drop 1.9 percent. Shipping stocks, highly sensitive to disruptions in global trade routes, also took a hit, with Seatrium falling 3 percent, Yangzijiang Shipbuilding down 4.9 percent, and Marco Polo Marine recording a 5.2 percent decline. Infrastructure giant Keppel dived 5.7 percent, illustrating the broad-based nature of the market’s reaction to the geopolitical crisis.

Amidst the broader market downturn, other assets also reacted sharply. Gold fell about 4.5 percent overnight, and the Australian dollar slid 0.8 percent as traders cashed out of winning bets to cover losses elsewhere in what proved to be a highly volatile week. US stocks also pared heavier losses but the S&P 500 closed 0.8 percent lower, reflecting global interconnectedness.

The sharp, synchronized market decline across Asia, particularly impacting the Straits Times Index, underscores the profound vulnerability of global financial markets to geopolitical instability, especially when it threatens critical energy supplies and exacerbates inflationary pressures.