Asian equities declined as renewed military clashes between the United States and Iran pushed Brent crude oil prices above $91 per barrel, intensifying concerns that higher energy costs could keep inflation elevated and prompt central banks, including the US Federal Reserve, to consider further interest-rate hikes.

The regional weakness in Asia followed a downbeat session on Wall Street. The S&P 500 Index closed 0.3% lower on Monday, August 31, even as chip stocks bucked the broader retreat.

The escalation in tensions around the Strait of Hormuz, a critical chokepoint for global oil shipments, has kept traders focused on the risk of supply disruptions, with benchmark Brent crude trading above the $91 mark. The waterway handles roughly a fifth of globally traded oil, and Asia's major economies, including Japan, South Korea, and India, are among the world's largest crude importers, leaving the region's equities and currencies particularly exposed to any sustained rise in energy costs.

Higher oil prices also complicate the inflation outlook at a time when central banks have been signalling that policy could remain restrictive for longer. Markets are watching upcoming economic data and central bank commentary for indications of whether energy-driven price pressure alters the rate path, with further escalation near the Strait of Hormuz likely to remain a key variable for regional risk sentiment.

Source: CNBC-TV18