Oil prices jump as Middle East strikes jolt Asia markets

Oil prices rose as US-Iran strikes widened, pushing Brent above $91 and pressuring Asian markets already hit by an AI-led tech selloff.

The weekend escalation gave traders a second shock to price in after last week’s sharp retreat in technology shares. The immediate market reaction was defensive: crude gained, the dollar firmed against most major currencies and several Asian equity benchmarks weakened.

Brent tests $91

Brent crude rose as much as 3.8% to more than $91 a barrel, its highest level since June, according to the market moves cited in the source material. West Texas Intermediate advanced 2.3% to $84.41 a barrel, extending a monthly oil rally that the source put at more than 20%.

Iranian media reported that US forces hit Qeshm Island in the Persian Gulf and southern Iranian cities including Shadegan, Sirik and Hajiabad. The same reports gave no immediate details on casualties or damage, while Iran was said to have targeted a power and water desalination plant in Kuwait for the third time in as many days.

Tech rout hits Asia

Asian equities fell as the oil shock collided with a technology selloff that had already damaged risk appetite. South Korea’s Kospi Index lost more than 1%, while Nasdaq 100 futures rose 0.6% after Friday’s decline in US technology shares.

The MSCI Asia Pacific Index was described as close to correction territory after dropping more than 9% from its June record high. The Philadelphia Stock Exchange Semiconductor Index fell into a bear market on Friday, pressured by doubts over whether artificial-intelligence spending can keep supporting valuations.

Moonshot AI sat near the center of that pressure after its latest model challenged investor assumptions about US leadership in artificial intelligence. The Chinese startup told investors it could go public in as little as six months, while Taiwan Semiconductor Manufacturing Co. said it is adding $100 billion to its Arizona investment plans to serve US customers and counter rivals.

Kyle Rodda, senior analyst at Capital.com, wrote that "The dynamic is likely to be acutely felt in Asian markets today." He added that another rise in crude could threaten activity in an energy-insecure region, while falling semiconductor shares were "fueling a wholesale deleveraging across the world."

Dollar strength tightens conditions

The dollar gained support from haven demand, while Treasury 10-year futures slipped seven basis points during Asian trading hours. Cash trading in Treasuries was closed in the region because of a holiday in Japan, leaving investors to wait for London trading to test the full bond-market reaction.

Gold extended last week’s decline, falling 0.7% to $3,990.89 an ounce, while silver and platinum also moved lower. Australia’s 10-year yield rose six basis points to 4.96%, a sign that higher energy costs were feeding concern about inflation and interest-rate persistence.

Wee Khoon Chong, a macro strategist at BNY in Hong Kong, wrote that "Asia’s risk backdrop continues to deteriorate." He cited the combination of weaker technology shares, a firmer US dollar, higher oil prices and geopolitical tension as reasons for a more defensive stance.

Traders were also weighing signals from Federal Reserve Chair Kevin Warsh, who has made inflation reduction the central bank’s priority, according to the source material. Elias Haddad, global head of markets strategy at Brown Brothers Harriman, wrote that the "US dollar can gain upside traction this week if the July PMI data reinforces the US economic outperformance story."

If crude stays elevated, the global macro channel runs through higher import bills, firmer inflation expectations and less room for central banks to ease financial conditions. For Moonshot AI, a volatile tape could complicate any near-term listing plan even if investor interest in its model remains strong; for the wider chip sector, it would keep pressure on valuations tied to AI capital spending.

If oil retreats and the military exchange does not widen, markets may refocus on company earnings and AI demand rather than energy risk. In that case, Moonshot’s prospective listing could become a test of whether investors still reward AI challengers, while semiconductor shares would need clearer proof that spending on new models can translate into durable revenue.