The ongoing US–Iran conflict, now in its sixth week, continues to elevate the risk premium in Brent crude oil, according to OCBC strategists Sim Moh Siong and Christopher Wong. Although Brent prices have retreated from early-week highs near USD119 per barrel, the situation in the Strait of Hormuz remains a controlled disruption rather than a resolution. Iran and Oman are reportedly drafting protocols to manage Strait traffic, which reduces the risk of a full shutdown but signals managed restrictions rather than a clean reopening. President Trump has threatened to destroy Iran’s power plants and bridges unless the Strait is reopened by his Tuesday deadline, underscoring persistent supply risks. OCBC’s base case expects Brent to ease to USD85–70 over the next 6–12 months, but the risk premium remains elevated due to ongoing tensions [1].
MUFG’s Senior Currency Analyst Lloyd Chan notes that Asia is highly exposed to potential energy flow disruptions through the Strait of Hormuz. Prolonged disruptions would raise inflation risks, worsen current account balances, and weigh heavily on regional growth prospects. Asian currencies such as KRW, PHP, and THB are likely to remain vulnerable, while CNY is expected to stay relatively resilient due to higher energy self-sufficiency and sizeable strategic reserves. This resilience in CNY should lend support to MYR, which tends to move in tandem with CNY and benefits from strong domestic fundamentals [2].
TD Securities analysts expect US ISM Services to soften in March as geopolitical uncertainty from Iran weighs on sentiment. They forecast the index to fall to 54.2, reversing February’s gain, with most components slowing and employment slipping back into contraction. Supplier delivery times could provide upside risk due to supply chain disruptions linked to the Iran conflict, as seen in ISM manufacturing data [3].
According to [1], market hopes for de-escalation appear premature, with sentiment only temporarily improved. However, [3] reports that US service sector momentum is set to cool, reflecting the broader impact of Iran-related uncertainty on economic activity.
CONCLUSION
Tensions in the Strait of Hormuz are sustaining elevated risk premiums in Brent crude and causing ripple effects across global markets. Asian currencies and US service sector growth are particularly vulnerable to ongoing disruptions, while CNY and MYR show relative resilience. The market remains cautious, with no clear path to de-escalation and persistent supply risks influencing sentiment and economic outlook.