According to APP, rising crude oil prices have become a thorny issue for overseas importers, but they may ultimately pass on the cost pressures to US assets. Following the US-Israeli attack on Iran, global oil import costs have surged, and most major economies' currencies have suffered heavy losses against the US dollar. This double whammy of a stronger dollar and soaring oil prices is forcing overseas countries and companies to consider selling their holdings of US stocks and bonds to pay for the suddenly expensive oil. This risk warrants continued monitoring, especially given the growing share of the US market held by foreign investors.

Latest market data shows that Brent crude oil prices have risen to around $108 per barrel, a significant increase of over 50% from recent lows, directly pushing up energy expenditures for Asian importing countries. The US dollar index has also strengthened, with the dollar hovering around 158.3 against the Japanese yen and around 1497 against the South Korean won, both showing significant appreciation since the beginning of the year, further amplifying the dollar-denominated cost of oil imports. Brij Khurana, portfolio manager at Wellington Management, stated explicitly: “So far, foreign investors haven’t needed to liquidate US assets to finance higher energy costs. However, if oil prices remain high, these countries (such as Japan and South Korea) may need to reduce their holdings of US stocks and bonds to obtain funds to pay for energy imports.”

This mechanism is essentially amplified by the linkage between exchange rates and commodity prices. To maintain stable energy supplies, Asian importing countries must settle oil purchases in US dollars, and currency depreciation means they need to exchange more local currency for US dollars. Simultaneously, rising oil prices directly increase the total amount of purchases, creating a double burden of "increased volume and price." When foreign exchange reserves are under pressure, selling the most liquid US assets becomes the most direct means of financing. Brij Khurana emphasizes that while large-scale liquidation has not yet occurred, if oil prices remain above $100 for an extended period, Japan (currently approximately $1.2253 trillion) and South Korea (approximately $141.3 billion), which hold large amounts of US debt, will face a real choice.

The following is a comparison of exchange rate pressures and US Treasury holdings in major Asian importing countries (based on the latest data as of March 2026):

Overall, this risk has not yet translated into a large-scale sell-off, but it has become a key concern for global capital markets. If the situation in the Middle East does not ease quickly, the combination of a strong dollar and high oil prices will continue to test the resilience of asset allocation in Asian importing countries.

Editor's Summary:
Crude oil prices rising to $108 per barrel, coupled with a stronger US dollar against Asian currencies, have put both exchange rate and cost pressures on importing countries such as Japan and South Korea. A warning from Wellington Management firm Brij Khurana suggests that against the backdrop of continuously expanding foreign holdings of US assets, energy financing demand may gradually translate into selling pressure on US stocks and bonds. Investors need to closely monitor oil price trends, exchange rate fluctuations, and the dynamics of major central bank foreign exchange interventions to assess the potential impact of this transmission chain on global capital flows.