Oil Jumps to US$111 as Hormuz Stays Shut, ASX Slides Hard

The Oil Chokepoint Shock

Brent crude jumped 20% to US$111 per barrel, while the ASX 200 fell 3%, with companies like Karoon Energy, TMK Energy, and Woodside all trading in the green today.

The rally follows output cuts from several producers and the continued closure of the Strait of Hormuz, one of the most important shipping channels in the world. Normally, this route carries roughly one-fifth of global oil supply and acts as a critical artery for major importers like China, India, and South Korea.

So when this channel is disrupted, the market starts pricing in a major supply shock very quickly. In simple terms, the constraint represents the potential loss of up to 20 million barrels per day from global markets.

What is making the situation worse is that storage facilities across parts of the region are also nearing capacity. That is forcing some producers to respond in different ways.

The UAE and Kuwait are reportedly cutting production because storage capacity is tightening. Iraq is shutting in production as the conflict escalates. And multiple OPEC+ producers are now reducing output at the same time.

There are also growing concerns around key Saudi infrastructure. Saudi Arabia’s Shaybah field, which produces around 1 million barrels per day, is reportedly under drone threat. And the Ras Tanura refinery, one of the kingdom’s most important energy assets, has been forced to suspend operations.

When you put all of that together, it becomes easier to see why oil prices are moving so aggressively.

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Energy Stocks Green, Everything Else Red

The market is now pricing in a longer conflict timeline.

Despite the economic risks, Trump signalled a willingness to escalate further, saying in a social media post that the US may consider striking additional locations and groups in Iran that were not previously targeted.

Those remarks came after Iranian President Masoud Pezeshkian said Tehran would not retreat, with Iranian leadership also vowing to stand firm.

With both sides hardening their stance, the fighting shows little sign of easing.

And that is why futures markets are now starting to price in a longer and more prolonged conflict.

ASX Cracks as Oil Explodes

The ASX opened with a liquidation of around $95 billion, and tech stocks were hit the hardest.

Right now, the sector is facing a perfect storm. There is growing doubt around AI, with companies spending hundreds of billions of dollars while returns remain uncertain.

There are also rising fears around software disruption. The market is starting to question whether AI could replace parts of existing business models.

The geopolitical backdrop is making things worse too. The Middle East oil shock is adding supply chain risk and pushing investors further away from growth assets.

On top of that, there is regulatory risk. Restrictions on AI chip exports are creating another layer of uncertainty for the sector.

And finally, valuations are resetting. When stocks are priced for perfection, it does not take much for the market to start questioning what they are really worth.