Japan’s Stocks Face Earnings Risk as Iran Conflict Lifts Oil

Japan’s equity rally built on strong corporate earnings is beginning to look vulnerable as the escalating conflict in Iran pushes crude oil prices higher, stoking concern that rising energy costs could erode profits.

A 10% gain in Brent crude prices would shave 1% to 2% off Japanese companies’ net income, said Kazunori Tatebe, chief strategist at Daiwa Asset Management Co. Brent is trading at about $104 a barrel, more than 50% above last year’s average — a heavy burden for a nation that imports almost all of its oil.