Nikkei dropped another 3.2% bringing losses for March to around 13%, Kospi index was down 2.75%, while Hang Seng index shed 0.9%

Stock markets slumped in Asia on Monday as investors dug in for a protracted Middle East war that already has oil prices heading for a record monthly rise, bringing a spike in inflation and the risk of recession to much of the world.

Iran’s control of the Strait of Hormuz, capacity to disrupt global energy and food markets, and sustained missile and drone capabilities give it little incentive to concede, pressuring the US to act, said Commonwealth Bank of Australia senior geo-economics analyst Madison Cartwright. We expect the war to run at least into June, with the risk tilted to a longer conflict.

The clampdown on the Strait has sent prices for oil, gas, fertiliser, plastic and aluminium surging, along with fuel for planes and shipping. Prices for food, pharmaceuticals and petrochemical products are all set to rise.

This is bad news for Asia as much of the continent is highly dependent on energy from the Middle East.

Nikkei dropped another 3.2% bringing losses for March to around 13%. Kospi index was down 2.75%, while Hang Seng index shed 0.9%.

Straits Times Index reversed course and was up 0.02% at the midday trading break.

Paring a bigger surge earlier in the day, Brent crude added 2.5% to $115.35 a barrel, bringing its gains in March to around 60%.

The longer the Hormuz Strait remains closed, the sharper the drawdown in buffer supplies that could spark dramatic increases in the price of crude oil, natural gas and other commodities, said JPMorgan’s global head of economics Bruce Kasman.

He added: A scenario in which the strait remains closed for an additional month would be consistent with oil prices rising towards US$150 per barrel and constraints on industrial consumers of energy supply.