OIL CLIMBS ABOVE $100 AS MIDDLE EAST TENSIONS SHAKE GLOBAL MARKETS

Oil prices rose sharply on Monday as growing concerns over disruptions to crude supplies from the Middle East pushed both major benchmark contracts further above the $100-per-barrel mark. The increase came after Saudi Arabia shut its East-West pipeline following drone attacks by Yemen’s Houthi rebels, while a merchant vessel was also hit in the Strait of Hormuz, raising fresh fears about the security of vital energy routes.

Brent crude and West Texas Intermediate both gained more than three per cent at one point during trading before easing slightly. At about 0810 GMT, WTI was up 2.7 per cent at $102.73 per barrel, while Brent rose 2.9 per cent to $107.66. The developments have heightened concerns about the impact of higher energy costs on global inflation, particularly as countries already face pressure from elevated fuel and transportation expenses.

The situation has also affected financial markets, with investors selling technology stocks amid growing concerns about interest rates and the future pace of artificial intelligence development. The US Federal Reserve is expected to raise interest rates at its meeting this week, following data showing that inflation remains above its two per cent target. Higher borrowing costs could put additional pressure on technology companies that have relied heavily on debt and large investments to finance their AI expansion.

Tech stocks came under further pressure after Anthropic chief executive Dario Amodei called for AI companies to slow down the development of increasingly powerful systems so that their potential risks can be better understood. OpenAI chief Sam Altman and xAI founder Elon Musk backed the call, while some researchers have warned that advanced AI systems could eventually become difficult for humans to control. The comments contributed to the sell-off, with SoftBank falling more than 10 per cent, Kioxia losing over six per cent and Advantest declining more than two per cent.

Markets across Asia were mixed, with South Korea’s Kospi suffering the biggest decline at more than three per cent, while Japan, Shanghai, Taipei and several other markets also recorded losses. Analysts said the combination of expensive oil, rising bond yields and concerns over AI valuations was making technology stocks particularly vulnerable. However, they noted that the current sell-off appeared more like a sentiment and valuation shock than evidence of a collapse in demand for AI, with deeper concerns likely to emerge if companies begin cutting technology spending or cancelling major data-centre and chip projects.