Asian markets drop after Trump signals he’ll bomb Iran ‘back to the stone ages’, tells other countries to ‘take the lead’ in reopening Hormuz

Asian investors reacted poorly to U.S. President Donald Trump’s nationwide address on Thursday. After more than a day of speculation as to what Trump might discuss, ranging from sending in ground forces to plans for a ceasefire, the president’s address instead signaled a continued conflict and energy disruptions.

Trump delivered his address right as trading had started in some Asian markets. In his 20-minute long speech, the president said the U.S. will likely continue military operations for another 2-3 weeks, that he was ready to bomb Iran “back to the stone ages”, and that he was ready to hit power plants if a deal wasn’t reached.

West Texas Intermediate Crude surged past $106 per barrel; rising oil and gas prices will continue to put pressure on Asian economies that rely on imported energy.

South Korea’s KOSPI, which has swung wildly since the war began over a month ago, fell by almost 4.5%. Japan’s Nikkei 225 dropped by 2.4%, while Hong Kong’s Hang Seng Index fell by around 0.7%. Taiwan’s TAIEX fell by 1.8%. As of 4:30am Eastern, India’s NIFTY 50 is down by 0.67%.

Reopening Hormuz

Trump’s messaging on Iran has constantly shifted over the past few weeks, oscillating between calls for expanded and aggressive strikes on the Middle Eastern country, to suggestions that he might be comfortable with withdrawing from the conflict and leaving Iran to hold the Strait of Hormuz.

The strait is a critical waterway for much of the Middle East’s oil and gas, bound for markets in Asia and Europe. The Strait has been effectively closed since the war began.

The U.S. president has tried to lobby allies to do more to keep the Strait open, with little effect. While countries like Japan, Australia and the U.K. have criticized Iran’s decision to block the waterway, none have committed to using military force. 

Trump’s patience may have run out. In his address, he called upon countries to show some “delayed courage” in taking the Strait for themselves, arguing that an “essentially decimated” Iran wouldn’t be able to provide much resistance.

“Countries of the world that do receive oil through the Hormuz Strait must take care of that passage,” the president argued. “We will be helpful, but they should take the lead in protecting the oil that they so desperately depend on.”

Iran, in the meantime, is quickly institutionalizing its control of the Strait, taking the power to decide what ships are allowed to transit the waterway—and how much they should pay for the privilege to do so.

Iran first evaluates ships asking to cross the Strait to ensure they have no links to Israel, the U.S., or other countries Iran deems an enemy, Bloomberg reported on Wednesday. Then negotiations over the fee, paid in Chinese yuan or stablecoins, begin, with friendlier countries getting a lower fee.

The Asia energy crisis

Asia, which gets much of its oil and gas from the Middle East, is now girding for an extended energy crisis. Oil and gas shortages have pushed many Asian countries to impose export bans on refined fuel products, which have knock-on effects on other countries in the region. The Iran war is also snarling shipments of other commodities, like fertilizer, aluminum and helium.

Southeast Asian countries are now trying to ration fuel and lower energy consumption to preserve stocks. They’re also trying to turn to other ways of generating power, including reopening coal plants and setting out pathways to adopt more nuclear power and renewable energy.

On Wednesday, Australia Prime Minister Anthony Albanese gave his own national address, where he laid out how his government is trying to secure fuel supplies. Australia imports most of its fuel, and has been hit hard by shortages of refined oil products like petrol and jet fuel. The country has cut gas taxes and is trying to source fuel from other suppliers. 

“Australia is not an active participant in this war, but all Australians are paying higher prices because of it,” Albanese said. 

Airlines in the Philippines and Vietnam are suspending flights, and governments across the region have implemented four-day weeks for public officials. (Malaysia, on Thursday, ordered civil servants to work-from-home starting April 15).

Several Asian governments also subsidize fuel, which is increasingly expensive as oil prices continue to climb upwards. On Tuesday, Indonesia limited the amount of subsidized petrol people could buy. Fuel subsidies threaten to blow a hole in Jakarta’s already strained budget. The government is considering rolling back social programs like its free-meals scheme, a core plank of President Prabowo Subianto’s political agenda. 

Another hard-hit country is South Korea, which relies heavily on imported oil and liquified natural gas. The country is considering curbs on driving for the first time since 1991 if oil prices continue to rise, and officials are pushing for an additional $17.3 billion in government spending to bolster the economy. 

“The current crisis is not a passing shower that quickly subsides, but rather a massive storm whose duration is uncertain, making it all the more severe,” South Korea president Lee Jae Myung told lawmakers on Thursday.

“If we save every drop of fuel, avoid wasting even a single plastic bag…we can emerge from the tunnel of crisis safely and swiftly.”

This story was originally featured on Fortune.com