Oil Prices Soar on Fresh Middle East Tensions as Chip Firms Bleed

Oil prices surged on Wednesday after fresh Middle East tensions sparked fears over supplies through the Strait of Hormuz, while chip firms continued to suffer as investors reassessed their bets on the AI boom.

The US and Saudi warplanes carried out strikes against Iran-backed militants in Iraq who launched drone attacks in recent days, according to the US military. The attacks targeted 'Iran-aligned terrorists that the Islamic Revolutionary Guard Corps directed to attack US forces and Saudi energy infrastructure', CENTCOM announced.

Iran said it had halted three oil tankers in the strait, through which a fifth of global crude and gas usually pass. Both main oil contracts rose more than four percent on Wednesday, with Brent surging from around $72 at the start of July to over $100 last week before a recent pause.

The tech sector came under pressure as traders fretted over the vast sums being pumped into the AI sector, questioning whether firms' lofty expectations would be met. Seoul was hard hit, with the Kospi plummeting more than six percent as chipmakers SK hynix and Samsung were hammered 10 percent and six percent respectively.

Investors remained on edge ahead of the Fed's policy decision later in the day, with some observers warning it could provide a hawkish surprise. Uncertainty has been fueled by new boss Kevin Warsh's refusal to publicly share his views on the economic outlook, part of his proposed reforms to reduce forward guidance.