Oil gains on Mideast supply fears, AI warnings rattle tech firms

Oil prices jumped on Monday as Saudi Arabia closed a key pipeline amid the Middle East war, fuelling worries about high inflation that is set to push the US Federal Reserve into hiking interest rates this week.

As crude futures rose once more -- they began the week with gains of three % -- US average diesel prices were also shooting higher, reaching a new record high above $6.0 a gallon.

The widely expected Fed hike at a policy meeting set for Wednesday compounded a fresh selloff in technology stocks across Asia but helped strengthen the dollar.

European stock markets were mostly lower around midday, though London managed to advance, helped by gains for heavyweight oil firms Shell and BP as well as its lack of exposure to the technology sector.

'Double headache'

Tech bosses have backed calls for a slowdown in the development of artificial intelligence amid warnings that the technology could pose a threat to humanity.

Anthropic CEO Dario Amodei was the latest to sound alarm, calling Saturday on AI firms to slow the development of the powerful technology, saying that "addressing the risks requires even more prudence".

"Oil and AI fears are causing a double headache for investors, with bond yields rising again and a loss of momentum on equity markets," said Russ Mould, investment director at AJ Bell.

"It adds to existing inflation fears which were stoked last week by the latest US consumer price index data remaining at elevated levels," he added.

Read More

Oil gains on Mideast supply fears, AI warnings rattle tech firms

Both main crude contracts -- already sitting above $100 a barrel -- rallied after Riyadh shut its East-West pipeline following drone attacks by Yemen's Houthis, while a merchant vessel was struck in the Strait of Hormuz.

The Houthis have been cementing their hold on the Bab Al-Mandab strait, a vital shipping corridor linking Europe and Asia.

Fed set to hike

Average diesel prices in the United States struck a new record high at $6.23 a gallon, having topped $6.0 for the first time on Friday -- pressuring President Donald Trump, who has pledged economic relief ahead of midterm congressional elections in November.

Official data last week showed US inflation remained well above the Fed's 2% target.

Markets see "a 92% probability of a hike, with 50 basis points of cumulative tightening assumed by year-end", said Chris Weston, an analyst at Pepperstone.

Expectations for a series of increases -- the European Central Bank lifted rates last week -- have weighed on equity markets, particularly tech firms that rely on debt to finance their vast AI investments.

Tokyo-listed tech investment titan SoftBank plunged more than 10% Monday, while chipmaker Kioxia shed more than 6%.

South Korea's SK hynix and Samsung were also sharply lower along with TSMC in Taipei.

Key figures at around 1015 GMT

Brent North Sea Crude: UP 3.0% at $107.71 per barrel

West Texas Intermediate: UP 2.9% at $102.90 per barrel

London - FTSE 100: UP 0.7% at 10,727.07 points

Paris - CAC 40: DOWN 0.8% at 8,118.23

Frankfurt - DAX: DOWN 0.5% at 25,439.34

Tokyo - Nikkei 225: DOWN 0.8% at 63,492.99 (close)

Hong Kong - Hang Seng Index: UP 0.5 % at 24,917.60 (close)

Shanghai - Composite: DOWN 0.1% at 3,885.33 (close)

Dollar/yen: UP at 154.66 yen from 153.71 yen on Friday

Euro/dollar: DOWN at $1.1542 from $1.1596

Pound/dollar: DOWN at $1.3481 from $1.3527

Euro/pound: DOWN at 85.60 pence from 85.73 pence

Shell (isin = GB00B03MLX29)

BP (isin = GB0007980591)

SOFTBANK GROUP (isin = JP3436100006)

SK Hynix (isin = KR7000660001)

Samsung Electronics (isin = KR7005930003)

TSMC - TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY (isin = TW0002330008)

INDEX CORP. (isin = JP3153300003)