19.03.202617:43 Forex Analysis & Reviews: Brent tops $112 as deliveries through Strait of Hormuz cripple

Stock markets across Asia plunged on Thursday after a simultaneous spike in attacks on energy facilities in the Persian Gulf and statements from two major central banks pledging to keep interest rates unchanged.

These events pushed oil to new highs and amplified uncertainty for traders, who must balance supply/risk concerns against signals from US and Japanese monetary policy.

Brent crude topped $112 a barrel in morning trade after a series of strikes on energy assets around the Gulf, the Economic Times reports.

Israel and Iran blamed each other: Iran said Israel struck the South Pars gas field and reportedly fired missiles toward Qatar and Saudi Arabia in response.

Tehran declared energy infrastructure across the Gulf to be legitimate targets, and Qatar's state energy company reported significant damage in the industrial city of Ras-Laffan — one of the world's largest LNG processing hubs.

The main driver of higher prices is the disruption to shipping through the Strait of Hormuz, which handles roughly one-fifth of global oil flows.

Commercial ship transits have fallen from an average of about 138 passages a day before the conflict began on February 28 to virtually zero, Newsweek cites the US-run Joint Maritime Information Centre.

The International Energy Agency called the current crisis the largest disruption to oil supplies on record and projects world supply could fall by about 8 million barrels per day in March.

Central bank reaction

The US Federal Reserve on Wednesday left the policy rate unchanged in a 11?1 vote at 3.50%–3.75%, marking the second pause in 2026.

Chair Jerome Powell acknowledged the Fed is in a "difficult spot," balancing inflationary pressure — intensified by the Iran conflict and tariffs — with a cooling labor market.

Updated Fed forecasts still anticipate one rate cut this year, but Powell warned that if progress on inflation stalls, "you will not see rate cuts."

There was one dissent: Fed Governor Steven Miran, appointed by President Trump, voted for a 25?bp cut, echoing Trump's public calls for immediate easing.

Hours later, the Bank of Japan left its short?term policy rate at 0.75% — the highest since 1995. A Reuters poll now suggests the BOJ will wait until the end of June before hiking rates again to 1%.

Market moves and investor reaction

Nikkei 225 fell about 2.4% ahead of the BOJ decision, and a broader Asian-region stock gauge dropped more than 1.3%. China's Shanghai Composite lost 1.37%.

The Asian sell-off followed a decline in US stocks: the S&P 500 and Nasdaq 100 fell about 1.4% on Wednesday.

For traders, this combination of shocks — a sharp jump in Brent and monetary policy uncertainty — increases volatility in energy and financial markets, raises risk premia and strengthens correlations between oil prices, commodity currencies and energy stocks.

Key points for traders

1. Oil supplies: an 8 million b/d drop in supplies and an effective halt to transit through Hormuz greatly raise the risk of further price increases and price volatility.
2. Geopolitical risk: Iran's declaration that energy infrastructure is a legitimate target and damage in Ras?Laffan mean the threat of new strikes remains high.
3. Monetary policy: the Fed pause, coupled with a continued forecast of a single cut this year and Powell's warning, means the policy path depends on inflation and labour?market data — cuts are not guaranteed if conditions worsen.
4. Market correlation: rising oil can compress corporate margins and boost inflation while supporting exporters' currencies and commodity sectors; tech stocks remain vulnerable to higher rates and rising risk premia.
5. Short-term indicators to watch: Brent moves and futures spreads, shipping flows through the Strait of Hormuz, reports on infrastructure damage (Ras?Laffan, South Pars), Fed and BOJ cues, and S&P/Nasdaq reaction to further geopolitical news.

The combination of physical supply disruption and cautious pauses by key central banks has produced a blend of heightened uncertainty and elevated volatility.

Traders and institutional investors will need to monitor Persian Gulf geopolitics and any new signals from the Fed and BOJ in tandem — these factors will largely determine asset?price moves and volatility in the near term. Jerome Powell remains at the Fed until a successor is appointed; this is his penultimate meeting as Chairman.