Hong Kong (CNN Business)Stocks are tumbling Monday as oil prices are soaring to the highest level in 13 years, raising fears about a further spike in inflation that could damage the global economy.
In Asia, Hong Kong’s Hang Seng Index (HSI) sank as much as 5% in morning trading. It was last down 3.4%, on track to log its worst daily drop in seven months. Japan’s Nikkei 225 (N225) tumbled 3.6%. South Korea’s Kospi (KOSPI) dropped 2.5%. China’s Shanghai Composite (SHCOMP) lost 1%.
On the US market, Dow futures fell 450 points, or 1.3%. S&P 500 and Nasdaq futures were down 1.6% and 2% respectively.
The latest turmoil came as US crude futures surged more than 7% to trade at $124.17 a barrel, the highest level since August 2008. Brent crude also rose to the highest level since 2008, up 8% to $127.66 a barrel.
Oil prices soared further after US Secretary of State Antony Blinken said Sunday in an interview with CNN that the United States is working with its allies in Europe to look into the possibility of banning Russian oil imports in an effort to further punish the country.
“In the event of any implementation [of the ban], the move will further exacerbate the supply-demand imbalance in an already tight oil market,” wrote Yeap Jun Rong, a market strategist for IG Group.
“Elevated oil prices may pose a threat to firms’ margins and consumer spending outlook, at a time where the Fed will face greater pressure of having to overcorrect with quicker and larger rate hikes in light of inflationary pressures,” he added.
Delays to the conclusion of Iranian nuclear talks added to investor concerns about supply disruptions, Yeap said.
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