Asian equity markets traded mostly higher on Friday after reports emerged that Iran and Oman are drafting a protocol to “monitor transit” through the Strait of Hormuz, raising cautious hopes that the crucial waterway could partially reopen. Iran’s deputy foreign minister Kazem Gharibabadi stated that tanker traffic through the strait “should be supervised and coordinated” by the two countries, according to Iranian state news agency IRNA. The language fell well short of an unconditional reopening, and market participants remained skeptical about the practical implementation, but the prospect of any commercial transit restoration was enough to trigger buying across a region that has endured five weeks of the most severe energy disruption since the 1970s.
South Korea’s KOSPI led regional gains, rising 1.75% as semiconductor and industrial names benefited from the shift in sentiment. Japan’s Nikkei 225 advanced approximately 1.35%, closing at 53,172, as investors tentatively re-engaged with the fiscal expansion trade that had been overwhelmed by energy concerns. The rally was measured rather than euphoric, reflecting awareness that the protocol reports described a framework for limited, supervised transit rather than a return to pre-war shipping conditions. Oil prices remained extremely elevated, with Brent at approximately $109 and the spot price for physical cargoes continuing to command massive premiums.
The practical obstacles to reopening remain formidable. Iran has set up its own shipping channel north of Larak Island, with payments assessed by the Islamic Revolutionary Guards Corps in Chinese yuan. One ship paid $2 million to use the channel, establishing a price point that would make sustained commercial transit prohibitively expensive for most operators. Insurance premiums remain at multi-year highs, and the Joint War Committee of the London insurance market has expanded its list of high-risk maritime areas to include waters around Oman. Until insurance coverage returns to commercial viability, the strait remains functionally closed for the vast majority of global shipping.
The Friday session’s modest gains came against the backdrop of extraordinary Thursday volatility. Oil prices surged before Western markets closed for the Good Friday holiday, with WTI jumping almost 12% to $112.06 and Brent climbing approximately 8% to $109.24. The Brent spot price for physical cargoes hit $141.36, the highest since the 2008 financial crisis. Australia and Hong Kong were closed for Easter, reducing regional liquidity. The combination of thin markets and geopolitically driven commodity price moves created conditions where small shifts in the diplomatic narrative produced outsized asset price reactions.
The broader economic damage from five weeks of energy disruption is becoming quantifiable. The Dallas Federal Reserve estimated that a one-quarter Hormuz closure would raise average WTI to $98 and reduce global GDP by an annualized 2.9 percentage points. Asian economies, which absorb 80% of Gulf oil and LNG exports, face a disproportionate share of that impact. The agricultural dimension, with 30% of global urea supply disrupted, adds a food security layer to what began as an energy market event. Several industry participants reported that U.S. oil exports to Asia are poised to surge in April as refineries hunt for alternative suppliers, a dynamic that could ease the physical shortage but at prices that remain punitive for importers.
For investors, Friday’s session offered the first cautious signal of potential resolution since the conflict began, but positioning should reflect the full range of outcomes rather than an assumption of imminent normalization. A phased reopening under Iranian and Omani supervision would reduce the immediate supply crisis but would not restore pre-war conditions. Insurance costs, shipping route adjustments, and the geopolitical risk premium embedded in energy prices will persist even in a best-case diplomatic scenario. The structural investment themes that define the Asian equity opportunity, AI semiconductors, Japanese fiscal policy, Korean governance, and Indian growth, will reassert themselves when the energy backdrop stabilizes. The timing of that stabilization remains the single most important variable for regional portfolio construction.
