Oil Prices Soar Amid Middle East Tensions

Tensions in the Middle East are escalating rapidly due to an attack by Iraqi drones on Saudi infrastructure and the closure of the key East-West pipeline, which bypasses the Strait of Hormuz. The outage is expected to last for over a month, with Saudi Arabia's export reserves potentially being depleted in as little as 5-7 days, cutting off the market from around 4 million barrels of oil per day.

The situation is further exacerbated by an unknown projectile striking a vessel in the Strait itself and the postponement of a meeting between the Gulf states and Iran. In response to these developments, Goldman Sachs has revised its forecasts, now expecting a one-off interest rate rise of 25 basis points at the US central bank's upcoming meeting on Wednesday.

The combination of rising oil prices and fresh concerns over regulation of the artificial intelligence sector is weighing heavily on global stock markets. Major US futures contracts are opening the week with sharp falls: the technology-heavy US100 is down 1.31 per cent, while the broad-based US500 is down 0.57 per cent.

Asian markets have also been hit hard by the sell-off, with futures on the Japanese JP225 index down 2.12 per cent and the South Korean market opening 3.45 per cent lower. However, stock markets in China are holding up somewhat more steadily.