Asian stocks steady as Middle East tensions lift oil

Stocks in Asia were little changed on Monday as oil prices held near recent highs, driven by concerns over potential supply disruptions in the Middle East.

The MSCI Asia ex-Japan index, a broad measure of regional equities, was flat in early trading, reflecting cautious investor sentiment. Oil benchmarks Brent crude and West Texas Intermediate (WTI) remained elevated, each trading above $80 per barrel, as geopolitical risks in the Gulf region weighed on markets.

Analysts noted that the sustained upward pressure on crude prices was the primary factor limiting gains in regional equities. "The market is caught between rising oil prices and the broader macroeconomic backdrop," said a strategist at a major investment bank. "Investors are treading carefully until there is more clarity on the situation."

The Nikkei 225 in Japan slipped 0.2%, while South Korea's Kospi edged down 0.1%. Australia's S&P/ASX 200 was flat, and China's CSI 300 index was largely unchanged. Trading volumes were subdued, with many investors adopting a wait-and-see approach.

In currency markets, the U.S. dollar held firm against regional peers, supported by safe-haven demand. The Japanese yen, typically a barometer for risk sentiment, was little changed against the dollar.

Oil prices remained supported by fears of supply disruptions in key producing regions. Brent crude futures were up 0.3% at $82.50 per barrel, while WTI crude futures rose 0.4% to $79.20 per barrel. The premium of Brent over WTI narrowed slightly, reflecting concerns over Middle Eastern supply risks.

Investors will closely monitor developments in the Gulf region and any further escalation in tensions. The outcome could influence both oil prices and broader financial markets in the coming sessions.

Analysts at Goldman Sachs highlighted that sustained oil price increases could pose challenges for energy-importing economies, particularly in Asia, where growth remains sensitive to commodity costs.