Oil prices edged higher in early Asian trading on Tuesday as investors assessed the United States intensified economic pressure on Iran, while Asian equities fluctuated following another decline on Wall Street.
The market reaction came after US Treasury Secretary Scott Bessent announced what he described as an “economic D-Day” for Iran, warning that countries continuing to trade with Tehran could face consequences.
The development comes as the conflict with Iran enters its sixth month, with negotiations to reopen the Strait of Hormuz stalled and neither side showing signs of backing down. The uncertainty has contributed to higher oil prices through August, raising concerns about longer-term inflation and putting additional pressure on bond markets.
Bessent said the US aims to cut off the economic channels supporting Iran until Tehran is isolated. He added that countries refusing to participate in US sanctions could also face consequences.
The US Treasury Department said Iran’s digital assets, technology, gold, aviation and shipping sectors would be targeted under the expanded sanctions campaign.
Oil prices had fallen more than 2% on Monday following Bessent’s comments, which appeared to suggest that Washington could prioritise economic pressure over immediate military escalation. Both major crude benchmarks subsequently recovered slightly in early Asian trading.
Stephen Innes, global strategist at Quintex Intel, said the increasingly aggressive US economic campaign was intended to restrict Iran’s access to the global financial system while avoiding an immediate escalation of military tensions.
The shift in focus toward economic measures has provided some relief to oil markets, potentially reducing concerns about an immediate disruption to global energy supplies.
Asian stocks, however, remained under pressure, particularly technology shares. South Korea’s Kospi fell more than 2% at one point as major chipmakers SK hynix and Samsung Electronics declined.
Hong Kong, Shanghai, Taipei and Manila also traded lower, while markets in Tokyo, Sydney, Singapore and Wellington recorded gains.
Investors are also awaiting Nvidia’s latest earnings report, with the chipmaker increasingly viewed as a key indicator of the strength of the artificial intelligence investment boom.
Markets have become more sensitive to the ability of technology companies to justify the enormous amounts being invested in artificial intelligence. Analysts expect Nvidia to report another strong quarter but warn that results could still disappoint investors if they fail to exceed already elevated expectations.
Charu Chanana, an analyst at Saxo Markets, said investors were focused not only on whether Nvidia could deliver another strong quarter but whether the company could generate enough upside to justify its high valuation, particularly as bond yields remain elevated.
Other technology companies, including Salesforce and Marvell, are also scheduled to report earnings this week.
Investors are additionally turning their attention to the annual gathering of central bankers, economists and finance officials in Jackson Hole, Wyoming, where Federal Reserve Chair Kevin Warsh is expected to speak.
His comments will be closely examined for indications about the direction of US monetary policy as inflation remains elevated.
Bond markets are also in focus after Bessent said the US Treasury would increase purchases of its own bonds in an effort to reduce borrowing costs. The announcement follows a surge in the 30-year Treasury yield to a 19-year high.
Meanwhile, the Canadian dollar edged higher on Tuesday after weakening against the US dollar on Monday. The currency came under pressure after US President Donald Trump threatened to double tariffs on vehicles imported from Canada.
The threat followed unsuccessful talks between Washington and Ottawa on Friday to prevent new 50% US tariffs on selected Canadian goods. The tariffs took effect on Saturday, with Canada subsequently outlining plans for retaliatory measures.
