Brent tops $88 as ASEAN warns of Iran war spillover

ASEAN foreign ministers expressed "serious concern" over renewed US-Iran hostilities Tuesday, warning the conflict's spillover could further damage regional trade, food security and energy markets already strained by months of war.

"We called on all parties concerned to exercise utmost self-restraint and avoid any acts that may further aggravate the situation," the 10-member bloc said in a joint statement after meeting in Manila.

The warning came as Brent crude topped $88 a barrel, its highest in a month, after the US completed a ninth straight night of strikes on Iran. The Strait of Hormuz — which handles about 21 percent of global oil trade — has seen transits drop to as few as eight vessels in a single day, according to maritime tracking firm Kpler, as Iran retaliates by targeting commercial shipping and allied Gulf states. The US has redirected three commercial vessels and disabled one oil tanker since reimposing its naval blockade on Tuesday, Central Command said.

For Southeast Asia, a net oil-importing region, the renewed conflict threatens to reignite inflation pressures just as central banks across the region were pivoting toward easing. The war has already killed 17 US service members and wounded more than 400, with Iran reporting at least 50 civilian deaths from US strikes since late June.

Rubio's Diplomatic Push

Rubio's arrival in Manila — part of a broader tour that included meetings with Lebanese President Joseph Aoun in Washington — underscores the administration's effort to contain the conflict's regional fallout. The US has reimposed a naval blockade on Iranian ports this week, redirecting three commercial vessels and disabling one oil tanker attempting to breach it, Central Command said.

The conflict's principal mediators — Pakistan and Qatar — are scrambling to revive the memorandum of understanding that collapsed after President Trump declared it "over" on July 8, following an Iranian drone strike on shipping in the strait. Iran announced July 18 it was suspending its commitments under the deal, with Supreme Leader Mojtaba Khamenei calling Trump's signature "worthless and invalid." Iran's deputy foreign minister, Kazem Gharibabadi, said Tehran was "no longer implementing" the agreement's terms.

Regional Contagion Spreads

Iran has broadened its retaliation beyond the strait, striking civilian infrastructure in Kuwait, Bahrain and Jordan. Kuwait reported Iranian attacks on a water desalination plant and an oil facility, with firefighters injured while battling blazes. Jordan said its air defenses intercepted 10 Iranian missiles, while air raid sirens sounded multiple times in Bahrain, home to the US Navy's 5th Fleet. The Gulf Cooperation Council accused Iran of "war crimes" for targeting civilian sites.

The last time the Strait of Hormuz faced a sustained closure — during the Iran-Iraq war in the 1980s — oil prices doubled and global GDP growth slowed by an estimated 2 percentage points. While current disruptions remain less severe, the re-escalation has erased most of the price declines that followed the June MOU, when Brent fell to $71 a barrel on July 1. Oil prices had dropped sharply after the interim deal, with Brent declining from a May peak of $114 to the July low, before the current surge.

Both Sides Signal Openness to Talks

Despite the escalation, both Washington and Tehran have reaffirmed willingness to resume negotiations. US Secretary of State Marco Rubio welcomed an "open door" to talks, while Iran's foreign ministry spokesman highlighted a positive role for diplomacy. Iran recently released an American woman who had been unable to leave the country since December 2024, a potential goodwill gesture.

"Our effective and targeted strikes against the enemy will continue until security and calm are restored along the southern coastline and in the Strait of Hormuz," said Brig. Gen. Seyyed Majid Mousavi, commander of Iran's Revolutionary Guard Aerospace Force, while also signaling openness to a diplomatic resolution.

For Southeast Asian economies, the stakes are high. The region imports more than 60 percent of its oil requirements, making it acutely vulnerable to supply disruptions through the strait. Any sustained price increase would raise import bills, widen current account deficits and pressure currencies — a scenario that played out during the 2022 energy crisis when several ASEAN central banks were forced into emergency rate hikes.

This article is for informational purposes only and does not constitute investment advice.