Japan’s benchmark Nikkei 225 index plunged more than 6% early Monday after oil prices soared to over $100 a barrel due to disruptions from the war in the Middle East.
The Nikkei was down 6.2% at 52,166.92 shortly after trading began. South Korea’s Kospi sank 6.3% and shares in Australia and New Zealand fell more than 3%.
The futures for the S&P 500 and the Dow Jones Industrial Average sank 1.9%.
The price for a barrel of Brent crude, was at $107.97 shortly after trading resumed Sunday on the Chicago Mercantile Exchange. That’s 16.5% higher than the international benchmark’s Friday closing price of $92.69.
Crude prices are at their highest level in more than three and a half years. Supply concerns have driven crude and gasoline higher as the war ensnares major oil-producing countries and hinders exports from the Persian Gulf.
The increases followed the U.S. crude price jumping by 36% and Brent crude rising by 28% last week. Oil prices have surged as the war, now in its second week, ensnared countries and places that are critical to the production and movement of oil and gas from the Persian Gulf.
If oil prices stay above $100 per barrel, some analysts and investors say it could cause serious damage to the global economy.
On Friday, the S&P 500 dropped 1.3% after a report showed U.S. employers cut more jobs last month than they created and after oil prices shot above $90 per barrel. The combination of a weak economy and high inflation is a worst-case scenario for investors because the Federal Reserve has no good tool to fix both problems at the same time.
The Dow plunged as many as 945 points before finishing with a loss of 453, or 0.9%, and the Nasdaq composite sank 1.6%.
