Oil prices jump 20% above $110 as conflict concerns impact Asian markets, while bitcoin remains stable around $67K.

Nikkei declines over 6%, and Kospi falls nearly 8% as traders assess supply disruption risks, while prediction markets indicate significant probabilities for $120 crude.

What to know:

• Oil prices surged past $110 a barrel, with West Texas Intermediate crude increasing by approximately 17 percent within 24 hours as tensions in the Middle East heightened concerns over supply interruptions near the Strait of Hormuz.
• Asian stock markets declined sharply due to the energy crisis, with Japan’s Nikkei 225 dropping more than 6 percent and South Korea’s Kospi falling around 8 percent, while major cryptocurrencies such as bitcoin remained steady at approximately $67,000.
• Prediction and derivatives markets are divided, with Polymarket estimating a significant chance of crude hitting $120 by late March, even as some traders speculate on a price decline, and the odds strongly suggest that the Federal Reserve will maintain interest rates in March despite renewed inflation concerns stemming from rising oil prices.

Oil futures rose above $110 a barrel on Monday as escalating tensions in the Middle East unsettled global markets, leading to a sharp downturn in Asian stocks, with all markets in the region opening significantly lower, while bitcoin remained stable near $67,000.

West Texas Intermediate crude experienced an increase of about 17% within 24 hours. Japan’s Nikkei 225 fell over 6% and South Korea’s Kospi decreased by around 8% as traders adjusted energy costs in import-reliant economies.

The surge is attributed to the potential for conflict to disrupt oil shipments near the Strait of Hormuz, a crucial passage for approximately 20% of the global crude supply. Prediction markets on Polymarket indicate a 76% likelihood that crude will reach $120 by the end of March.

Bitcoin traded around $67,000 without showing signs of panic selling. Ether and Solana recorded slight increases, indicating that crypto markets have so far perceived the spike as an energy-related shock rather than a broad risk-off scenario.

However, not all traders believe this upward movement is sustainable. Funding rates on oil perpetual futures on Hyperliquid have turned negative, suggesting significant bets on a market correction despite rising spot prices.

Markets continue to see minimal probability of an imminent rate cut.

Contracts on Polymarket reflect an approximately 98% chance that the Federal Reserve will keep rates steady at its March 18 meeting, with only about a 12% likelihood of a 25-basis-point reduction by the end of April.

A prolonged increase in crude prices would intensify inflationary pressures, a factor the Fed would need to consider when determining interest rates.