Asian stocks rallied and oil prices plunged at the start of trading on Tuesday, following a volatile session for markets overnight after US President Donald Trump declared the Middle East war could be “over soon.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 2.6 per cent, paring losses since the start of the conflict, while Brent crude futures fell as much as 10 per cent to below $90 per barrel as trading resumed. US equity futures were more muted, with S&P 500 e-mini futures down 0.2 per cent to pare Monday’s rebound.

Trump‘s remarks injected a burst of optimism that contrasted sharply with events in Iran, where hardliners rallied behind new Supreme Leader Mojtaba Khamenei in a pointed show of defiance.

The competing signals whipsawed global markets on Monday: oil prices initially spiked and stocks on Wall Street tumbled before rebounding sharply after Trump‘s comments and fresh reports suggesting Washington may soften sanctions on Russian energy.

“While all of this has helped ease some of the short-term panic, it’s hard to reconcile the idea of the conflict being ‘very complete‘”, said Tony Sycamore, market analyst at IG in Sydney.

“Nonetheless, the toning down of President Trump‘s rhetoric, from demanding full surrender to declaring the mission ‘very complete‘, is a welcome development that should help settle nerves for today’s session in Asia, at least.”

With investor confidence steadying after Monday’s selloff amid signs of increased risk-taking by retail investors, Japan’s Nikkei jumped 3.6 per cent, while South Korea’s Kospi surged 6.4 per cent. The gains prompted the Korea Exchange to trigger a sidecar trading curb after futures rose more than 5 per cent, halting programme trading for five minutes.

The backdrop for markets remained tense, however, with Iran’s military warning that it would step up its missile strikes in a further sign of defiance.

“If Iran does anything that stops the flow of oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far,” Trump said in a post on Truth Social afterwards.

US Treasury bonds recovered after Monday’s spike in oil prices sparked an inflation scare and fuelled expectations that central banks in Europe could tighten policy later this year.

The yield on the US 10-year Treasury bond was down 2.3 basis points at 4.109 per cent as traders pushed out bets on the timing of the Federal Reserve’s next rate cut, with the first reduction now not seen until July, according to the CME Group’s FedWatch tool.

“We are still at troubling levels,” analysts from ING said, referring to bond yields. “Expect nominal yields to fall for a bit on a reversal trade. But don’t expect a dramatic structural rally in bonds,” they wrote in a client note. “Remember, we still have clear inflation impulses to overcome, and the economy is down but not out.”

The US dollar index, which measures the greenback’s strength against a basket of six major peers, retraced all of its gains of the past week and was trading down 0.1 per cent at 98.79.

Gold was down 0.1 per cent at $5,133.55, holding within its trading channel of the past week, while cryptocurrencies remained directionless, holding the same range they have tracked since the beginning of February.

Bitcoin was up 0.2 per cent at $69,127.60, while ether was down 0.4 per cent at $2,018.69.

Saudi Arabia began oil output cuts, becoming the latest Gulf producer impacted by the US and Israeli strikes on Iran that has halted ship traffic in the region, sending crude prices up nearly 30 per cent on Monday to $119 a barrel and prompting G7 countries to consider releasing emergency oil stocks.

Saudi oil giant Saudi Aramco has begun cutting output at two of its oilfields, two sources said, adding to earlier reductions by Iraq, Kuwait, Qatar and the UAE as shipments continue to be blocked and they run out of storage.

The sources did not provide further details and the company declined to comment.

G7 finance ministers discussed releasing emergency oil stocks and a final decision could be taken by the seven countries’ leaders later this week. The G7 groups the US, Japan, Germany, France, Britain, Italy and Canada.

The International Energy Agency (IEA), which coordinates energy policies of Western and some other industrialised nations, holds over 1.2 billion barrels of public emergency oil stocks and a further 600 million barrels of industry stocks.

The Iran crisis has already cut global oil supply by a combined 200 million barrels over the past 10 days, according to analysts’ estimates.

Adding to market jitters was Iran’s naming of hardliner Mojtaba Khamenei as the country’s supreme leader, which cooled hopes of a quick end to hostilities.

Over the weekend Iraq cut output at its main southern oilfields by 70 per cent to 1.3 million barrels per day, three industry sources said, while Kuwait Petroleum Corp began cutting output on Saturday and declared force majeure.

In Bahrain, Bapco Energies declared force majeure following an attack on its refinery complex, the company said.

Oil prices hit their highest level since 2022 at more than $119 a barrel on Monday, although they later pared gains.

Saudi Arabia is diverting crude exports by pipeline to the Red Sea while Iranian threats of attack keep traffic into and out of the Gulf at an almost complete standstill. Hundreds of tankers sit idle inside the Gulf and just outside its southern Strait of Hormuz.

Emergency oil reserves release

US President Donald Trump, who returned to power last year pledging to deliver cheaper energy costs for Americans, sought to downplay concerns about rising US gasoline prices, which were up 11 per cent on the week on Friday.

Senate Minority Leader Chuck Schumer called on the president to sell oil from the Strategic Petroleum Reserve.

Japan, which imports around 95 per cent of its oil from the Middle East, has instructed a national oil reserve storage site to prepare for a possible crude release.

Governments are wary of the inflationary impact of soaring energy costs, with President Lee Jae-myung announcing South Korea’s first price caps on fuel in nearly 30 years.

Elsewhere, Vietnam removed import tariffs on fuels and Bangladesh shut universities to conserve electricity and fuel.

China has asked refiners to halt fuel exports and to try to cancel shipments that were already committed.

Qatar, the world’s second-largest exporter of liquefied natural gas, has also halted exports.

Even if the US places ships in the Strait of Hormuz to defend shipping, the route would remain “too dangerous”, Qatar’s Energy Minister Saad Sherida Al-Kaabi told the Financial Times in an interview published on March 6.

President Emmanuel Macron, speaking in Cyprus on Monday, said France was deploying about a dozen naval vessels to the Mediterranean, the Red Sea and potentially the Strait of Hormuz as part of defensive support to allies threatened by the crisis.

S&P Global Ratings expects the current regional conflict affecting the Gulf to ease within weeks, even as it reaffirmed Abu Dhabi’s sovereign credit rating amid heightened geopolitical tensions.

In a research update published on March 6, the ratings agency affirmed ‘AA/A-1+’ long- and short-term sovereign ratings with a stable outlook for both the UAE and the Emirate of Abu Dhabi, placing them among the strongest sovereign credits globally.

Abu Dhabi’s large sovereign wealth assets and fiscal buffers underpin the UAE’s overall credit profile and provide a significant cushion against geopolitical shocks. The AA rating places Abu Dhabi among the world’s strongest sovereign credits, just one notch below the highest possible AAA rating.

A separate note from S&P on Abu Dhabi’s rating highlighted how recent developments have affected the outlook.

“Our current expectations are that regional war — and threats to Abu Dhabi’s key infrastructure — will recede after a few weeks, and a period of recovery will be enabled by the authorities’ strong balance sheet and willingness to resume stability,” S&P said.

The assessment comes during one of the most volatile periods in the region in recent years, following escalating military exchanges between Iran and several countries in the Gulf.

S&P said Abu Dhabi’s financial strength remains a key stabilising factor, with the emirate’s large fiscal and external buffers expected to help absorb potential economic shocks linked to the conflict.

“Our base-case scenario remains that Abu Dhabi’s substantial fiscal, economic, external, and policy flexibility will act as an effective buffer against the impacts of regional conflict,” the agency added.

The outlook from S&P broadly echoes commentary published by Moody’s last week on the GCC insurance sector, in which the ratings agency said it expects the current conflict to be relatively short-lived.

Moody’s said its baseline scenario assumes the military escalation would likely last no more than four weeks, limiting the longer-term economic impact on regional financial institutions and insurers.

Read more: Ratings agency Moody’s expects Iran conflict to be “relatively short-lived”

Despite its relatively optimistic outlook on the duration of the conflict, S&P warned that the escalation could still weigh on economic activity in the near term.

The agency said the “intensity and scope of Iranian military action will reduce growth and weaken external and fiscal performance over 2026.”

Sectors such as tourism, trade, supply chains and financial services could experience temporary disruptions if tensions persist, while investor and consumer confidence may also be affected.

Even so, Abu Dhabi’s sovereign balance sheet remains one of the strongest globally. S&P estimates the government’s net asset position will reach about 358 per cent of GDP in 2026, providing a substantial buffer against external shocks.

The agency also noted that infrastructure damage so far appears limited despite recent attacks targeting parts of the region.

Overall, S&P said the emirate’s strong fiscal position, large sovereign wealth assets and track record of policy stability should help it navigate the current geopolitical shock and support a recovery once tensions ease.

When India’s largest oil explorer opened a tender for a cement order in 2018, it sensed something was off by the competing bids coming in: all of them were exactly INR7,000 per metric tonne.

Oil and Natural Gas Corporation queried the bids and got a wry reply from an executive at India Cements. Seven was his “lucky number”, he explained.

Suspicious, ONGC quietly lodged an antitrust case against three Indian cement companies.

Read more-Cooking gas prices rise in India on global surge

The details of the case were outlined in a confidential investigation report and evidence that were shared with the companies in January and reviewed by Reuters, following a five-year probe that found a decade of price collusion targeting state-run ONGC.

The Competition Commission of India (CCI) report said the “cartel period” ran 12 years between 2007 and 2018 for Dalmia Cement (Bharat), a unit of India’s fourth-largest cement maker Dalmia Bharat, and rival Shree Digvijay India Cements was part of the cartel for 2017-18.

The report identified thinly concealed attempts at collusion by Indian companies, signalling a growing willingness by the regulator to scrutinise domestic firms after months of high-profile investigations into foreign giants.

The Indian cement firms’ bid rigging, discussions of supply patterns and efforts to oust foreign bidders were “substantiated from strong evidences in form of communication, meetings, emails, admission,” said the 90-page report.

Local media outlet Zee Business reported the basic finding of wrongdoing last year, but Reuters is the first to report the detailed tactics and evidence that underpin CCI’s investigation findings.

Dalmia Bharat declined to comment citing pendency of the matter before the CCI, but has previously said it is cooperating with the authorities. India Cements, which was acquired by No. 1 player UltraTech in 2024, did not respond, and neither did Shree Digvijay, ONGC or the CCI.

The cement companies have been asked to respond to the report and the watchdog will then issue a final order within months. It has powers to drop any of the investigation findings, but fines can go as high as three times the companies’ profit or 10 per cent of their turnover for each year of wrongdoing.

In fiscal year 2024-25, Dalmia Bharat recorded annual revenues of $1.5bn, Shree Digvijay $79m and India Cements $444m.

After the Reuters story, shares of Shree Digvijay extended losses to fall as much as 5.4 per cent, while India Cements was down 4.4 per cent and Dalmia Bharat down 3.5 per cent.

‘Supported by the numerology factor of 7’

While Apple, Amazon and other foreign firms have faced intense antitrust scrutiny, the cement case highlights CCI’s focus on big Indian firms from key economic sectors.

“Tech cases have been a growing focus for CCI but there is increased cognizance within the government to tackle breaches at state-run firms and in public procurement,” said Gautam Shahi, a competition law partner at Indian law firm Dua Associates.

In January, Reuters reported an antitrust investigation found four major Indian steelmakers, including Tata Steel and JSW Steel, colluded on prices.

Before filing the case in 2020, ONGC noticed bids had come in at the exact same or very similar pricing in four tenders for oil well cement.

For example, the 2018 tender for 170,000 tonnes of cement saw all three companies quoting a price of 7,000 rupees, or 7,350 rupees per ton with taxes, for different states.

That prompted ONGC to issue a warning in late 2019, with a notice to India Cements, contained in the report, saying the identically priced bids suggested violation of competition law.

India Cements defended its bid in a written submission on its letterhead to ONGC that year, citing global trends as well as the “lucky number”.

“The financial bid was also supported by the numerology factor of 7”, the company letter stated.

Submitting bids together

The CCI’s investigation puts the onus of breaches on eight top executives including former managing director of Shree Digvijay, Rajeev Nambiar; billionaire chairman of Dalmia Bharat, Y H Dalmia; and former managing director of India Cements, N. Srinivasan, who is also one of India’s high-profile business figures. None of the executives responded to Reuters queries.

The CCI also cited Shree Digvijay senior vice president Prem R. Singh, whose testimony said “the prime objective for quoting the identical price was to allocate almost equal volumes and revenue amongst companies”.

Singh visited rival Dalmia’s office for “directly assisting” them in their tender filing in 2018, the CCI report said, citing messages sent by Singh to Nambiar, his then managing director. Singh did not respond to requests for comment.

Shree Digvijay and Dalmia were “actively involved” in calculating the rail freight distance of their factories from ONGC cement delivery destinations. They then bid accordingly to avoid competition and divided territories amongst themselves.

Excel sheets were also made comparing distances to decide “volume sharing” among rivals, the report showed.

Targeting foreign firms

Shree Digvijay and Dalmia also targeted foreign firms who bid by flagging “prickly issues”, said the report.

They repeatedly filed complaints with the Indian government about foreign bidders’ lack of certification and how New Delhi should promote domestic firms over foreign ones.

Foreign bidders included Texas-based Schlumberger, the world’s largest oilfield services provider now known as, UAE-based Classic Oil Field Chemicals, and Bell Weather, the report showed. The three companies did not respond to queries.

The investigators concluded that the companies tried at least once to pressure ONGC to cancel foreign bids by deciding to “restrict supply” of cement to the oil explorer, which breaches antitrust laws.

In 2019, one executive wrote to another: “Need your support in making them (ONGC) understand that they cannot throw Indian parties in bath tub.”

The companies could “not digest the fact that a foreign bidder” can be awarded a tender, the CCI said.

Surging oil prices and the escalating US-Israeli tensions with Iran hammered airline stocks in Asia on Monday, piling pressure on carriers already navigating tight airspace as travellers scramble to evade the Middle East conflict.

The tension has driven up fuel prices, with oil jumping 20 per cent in early trading on Monday, hitting its highest since July 2022, amid fears of tighter supply and prolonged disruptions to shipments.

Stranded passengers have been paying huge sums of money to escape the Middle East, with last-minute dashes to the airport, overland trips to less impacted hubs and fighter jets at times escorting passenger planes out.

Read more-US DFC unveils $20bn maritime reinsurance plan to support Gulf shipping

Since February 28, when the US-Israeli tensions with Iran started, through March 8, more than 37,000 flights to and from the Middle East were cancelled, according to data from Cirium.

Brendan Sobie, a Singapore-based independent aviation analyst, said the operating environment for airlines had been difficult even before the Middle Eastern crisis and the oil price spike due to political and economic uncertainty and supply chain issues.

“Now that already high level of uncertainty has increased even further,” he said.Shares in Australia’s Qantas Airways, Air New Zealand, Hong Kong’s Cathay Pacific, Japan Airlines, Korean Air Lines and major Chinese airlines China Southern and China Eastern all fell between 4 per cent and more than 10 per cent on Monday.

Shares of Indian carriers IndiGo and SpiceJet dropped 7.5 per cent and 5.6 per cent, respectively.

Fuel is the second-largest expense for air carriers after labour, typically accounting for a fifth to a quarter of operating expenses. Some major Asian and European airlines have oil hedging in place, but US airlines largely stopped the practice over the last two decades.

“If crude is rising 20 per cent, jet fuel is rising several times more as it is even more scarce, adding significant cost to operations together with crew resources which are stretched due to longer flying times when airspace is closed,” said Subhas Menon, head of the Association of Asia Pacific Airlines.

Hedging can protect airlines from spikes in fuel costs through the use of derivative contracts. But it can also backfire when prices fall, exposing carriers to above-market rates in swaps – a certain type of hedge contract that has burned some carriers in the past.

Travel disruptions persist as tensions escalates

With airspace severely constrained, airlines have been forced to reroute flights, carry extra fuel or make additional refuelling stops to guard against sudden diversions or longer flight paths through safer corridors.

Combined, Emirates, Qatar Airways and Etihad normally fly about one-third of passengers from Europe to Asia and more than half of all passengers from Europe to Australia, New Zealand and nearby Pacific Islands, according to Cirium data.

Flights to Iraq, Syria, Lebanon and Jordan by Turkish Airlines, AJet, Pegasus and SunExpress have been cancelled until March 13, Turkish Transport Minister Abdulkadir Uraloglu said on Sunday.

Air India has added dozens of flights to destinations in Europe and North America through March 18 as the closure of Middle Eastern airspace lifts demand for non-stop services.