Oil Price Surge Triggers Asian Stock Plunge Amid Inflation Fears

Asian stocks plummeted on Friday as oil prices surged and bond yields reached multi-year highs due to supply concerns fueled by the Middle East crisis. The Strait of Hormuz, a critical waterway for global energy supplies, has been a focal point in tensions between the US and Iran.

Crude prices have risen over 30% in the past week as the conflict escalated, with Brent oil nearing $110 per barrel, its highest since May, and West Texas Intermediate hitting a peak of over $104. The war is showing no signs of abating, prompting investors to brace for another surge in inflation that will put pressure on central banks to tighten monetary policy.

The 30-year Treasury yield reached 5.36%, a new post-2007 peak, while the 10-year benchmark approached 5% and nearly reached a 19-year high. The European Central Bank's rate hike warning and anticipation of a strong US consumer price index release later Friday added to market anxiety.

Investors see over a 70% chance that the Federal Reserve will opt for a quarter-point interest rate lift, according to CME Group's FedWatch tool. With oil prices continuing to rise and rate expectations growing, risk assets are taking a hit, leading to widespread selling across Asia and Europe.