US President Donald Trump announced on social media on June 14 local time that the US-Iran agreement was “now complete.” He officially approved the “free reopening” of the Strait of Hormuz and authorized the US Navy to immediately lift its maritime blockade of Iranian ports. Trump posted on social media: “Ships of the world, start your engines. Let the oil flow!”

In the early hours of June 15, Iran’s Supreme National Security Council issued a statement formally confirming that a ceasefire memorandum of understanding had been reached between Iran and the United States.

Pakistani Prime Minister Shehbaz Sharif subsequently confirmed on social media that, following intensive negotiations, the US and Iran had reached a peace agreement and agreed to immediately and permanently cease all military operations across all fronts, including those in Lebanon.

The formal signing ceremony is scheduled to take place in Switzerland on June 19.

Oil Prices Plunge

After the outbreak of the Middle East conflict in late February, shipping through the Strait of Hormuz was almost completely paralyzed.

According to estimates from International Energy Agency Executive Director Fatih Birol, the disruption to oil and gas supplies caused by this crisis exceeded the combined impact of the 1973 oil crisis, the 1979 oil crisis, and the Russia-Ukraine conflict.

Energy consultancy Rapidan Energy noted that the scale of this supply disruption surpassed every previous oil crisis in history and was more than double the size of the previous record-holder.

Following the announcement, WTI crude oil futures plunged more than 4.5%, briefly falling below US$80 per barrel and reaching a low of US$80.25, the lowest level since March 10.

Brent crude futures fell nearly 4% to US$83.90 per barrel.

European natural gas futures also dropped sharply, at one point declining 5.8%.

However, some market analysts cautioned that full supply normalization could still take months due to technical challenges, geological issues, and infrastructure damage.

In addition, strategic petroleum reserves and commercial oil inventories, which had previously declined at record speeds, will need to be replenished.

Japanese and Korean Stocks Surge

The dramatic rally in Japanese and Korean equities highlights just how important Middle Eastern oil remains to both economies.

The impact of falling oil prices on these markets can be broken down into three layers.

First Layer: Lower Manufacturing Costs

The core weightings of both the Korean and Japanese stock markets are concentrated in semiconductors and manufacturing.

Within the KOSPI, Samsung Electronics and SK Hynix together account for more than 20% of the index.

Within the Nikkei 225, semiconductor equipment and manufacturing companies such as Tokyo Electron and Kioxia also represent significant weightings.

These businesses rely heavily on stable and affordable energy supplies.

Semiconductor manufacturing is inherently energy-intensive. Maintaining controlled environments, producing ultra-pure water, and operating advanced lithography equipment all require continuous and reliable electricity.

Lower oil prices directly reduce power and logistics costs, expanding profit margins.

South Korea’s export data had already demonstrated strong semiconductor demand before this development.

Exports during the first ten days of June increased 85.9% year-over-year, while semiconductor exports surged 205.8%, exceeding US$10 billion for the first time within a ten-day period.

The combination of lower input costs and already-confirmed demand strength amplified gains among index heavyweight stocks.

Second Layer: Improved Current Accounts and Trade Conditions

Both Japan and South Korea are major importers of crude oil and liquefied natural gas.

During periods of elevated oil prices, import costs for both countries rose substantially.

Japan imports approximately 1.2 million kiloliters of naphtha from the Middle East each month, accounting for more than 40% of total supply. Higher oil prices translated into billions of dollars in additional monthly expenditures.

Following tighter sanctions on Russia, Japan has been forced to purchase LNG on the spot market at prices averaging 30%–40% above long-term contract rates, adding billions of dollars annually to energy import costs.

A decline in oil prices from above US$100 per barrel to the US$80 range could save both economies hundreds of billions of dollars in import costs over time.

Those savings directly support corporate profitability and government finances, providing a fundamental basis for equity valuation expansion.

Asia as a whole has been more heavily impacted by rising energy prices than other regions.

The region’s oil and gas trade deficit represents approximately 2.1% of GDP, compared with just 1.5% in the Eurozone. The United States, meanwhile, is not a net importer of oil and gas.

As a result, falling energy prices provide the greatest benefit to Asian energy-importing economies.

Third Layer: Korea’s Circuit Breaker Reflects Leverage Amplification

The KOSPI opened up 5.86% and briefly approached the 8,600-point level.

As KOSPI 200 futures gained 5%, the Korea Exchange activated a circuit breaker mechanism.

However, there is also a structural issue hidden beneath the rally.

Some market analysts point out that the KOSPI has already gained nearly 100% this year, while Samsung Electronics and SK Hynix have risen 182% and 255%, respectively.

Market breadth remains narrow, and leverage levels remain elevated.

The activation of the circuit breaker itself demonstrates how accumulated bullish positioning and leveraged bets were simultaneously unleashed following positive news.

Yet the same signal also suggests the opposite risk:

When market breadth narrows and leverage becomes widespread, even positive news-driven rallies may contain a higher risk of concentrated reversals.

Conclusion: The surge in Japanese and Korean equities on June 15 can be traced through a clear chain of causality.

At the agreement level, the United States and Iran confirmed a comprehensive ceasefire, lifted blockades, suspended oil sanctions, and committed to reopening the Strait of Hormuz within 30 days.

The collapse in oil prices reflected a reversal of expectations surrounding what had previously become the largest oil supply disruption in history, with approximately 11.8% of global oil supply affected by the paralysis of the Strait.

The transmission from lower oil prices into Japanese and Korean equity markets is equally clear.

Japan depends on imported crude oil for approximately 94.2% of its consumption, while South Korea’s manufacturing-heavy economy remains highly sensitive to energy costs. Every 10% increase in oil prices is estimated to raise inflation by approximately 0.6%.

The easing of those pressures significantly improves growth prospects for both economies, while strong performance among heavyweight stocks further magnifies gains at the index level.