Asian stocks tumbled on Monday as escalating Middle East tensions and a spike in oil prices triggered a broad sell-off, hitting key indices hard and testing investor optimism in tech stocks.

Markets across the region plummeted, with South Korea's benchmark index falling 8%, Japan's Nikkei dropping nearly 7%, and Taiwan's Taiex declining 5%. Hong Kong's Hang Seng fell over 3%. This followed a sharp rise in oil futures, which surged past $110 per barrel, the highest level in over three and a half years. The spike was linked to reports that the closure of the Strait of Hormuz prompted increased oil production cuts in the region.

Asian economies, particularly Japan, South Korea, and Taiwan, are highly vulnerable to Middle East energy disruptions. Japan imports about 90% of its oil via the Strait of Hormuz, while South Korea relies on the Middle East for roughly 70% of its crude. The sell-off was especially severe in the chip sector, which had driven much of Asia's recent gains. Nitto Boseki plunged over 18%, Samsung Electronics and SK Hynix fell nearly 10% each, and Taiwan Semiconductor Manufacturing Company dropped 5%. This volatility poses a significant test for the tech optimism that fueled record highs for AI-related stocks just last month.

The crisis underscores the region's dependency on stable Middle East energy flows and highlights how geopolitical shocks can swiftly reverse market gains, particularly in sectors heavily reliant on global supply chains and energy costs.