Emerging-market stocks fall for third day on Mideast oil fears

Emerging-market stocks fell for a third straight session on Monday as escalating conflict in the Middle East and surging oil prices drove investors toward safer assets, deepening pressure on energy-importing economies across Asia.

The MSCI ↗ 0.62% gauge of developing-nation equities posted its longest run of declines in nearly two months, according to Bloomberg, with South Korea's Kospi sliding more than 3% after major AI firms called for a slowdown in the technology's development. The Thai baht, Philippine peso, South Korean won, and Taiwanese dollar all weakened, while an index of emerging-market currencies was little changed after dropping in the prior two sessions.bloomberg

Oil Supply Disruptions Fuel the Selloff

The selloff was driven in large part by intensifying threats to global oil supply. Brent crude rose sharply on Monday after Saudi Arabia closed its East-West pipeline, a roughly 750-mile conduit that serves as a key alternative to the Strait of Hormuz for the kingdom's oil exports. The pipeline was shut down as a precautionary measure following multiple drone attacks launched from Iraqi territory on September 10-11, according to Reuters and CNBC.cnbc+3

A planned meeting on Monday between Iran and several Gulf nations on creating a temporary shipping lane through the Strait of Hormuz was postponed, according to Oman's foreign minister, further clouding the supply outlook.bloomberg

Europe's Energy Fears and ECB Warnings

The ripple effects of Middle East turmoil extended to Europe, where natural gas storage facilities stood at roughly 67-68% full as of mid-September — the lowest level for this time of year in 15 years. With only about 50 days remaining to reach the EU's 90% storage target by November 1, analysts warned of fresh winter price shocks.azernews+2

European Central Bank Executive Board member Isabel Schnabel called recent energy price developments "quite concerning" at a forum in Berlin on Monday. "It's not just oil, but also diesel," she said, adding that "refining capacities have reduced drastically and can't be rebuilt quickly".devdiscourse+1

Traders now face a consequential week of central bank decisions, starting with the Federal Reserve on Wednesday, followed by the Bank of England and Bank of Japan, as policymakers weigh renewed inflation risks from higher oil prices against slowing growth.bloomberg