Oil Prices Surge on Middle East Tensions Amid Tech Rout

Oil prices surged on Wednesday after a fresh flare-up in the Middle East sparked concerns about supply disruptions through the Strait of Hormuz. The US and Saudi warplanes carried out strikes against Iran-backed militants in Iraq, targeting 'Iran-aligned terrorists that the Islamic Revolutionary Guard Corps (IRGC) directed to attack US forces and Saudi energy infrastructure', according to the US Central Command.

The incident marked a three-day pause after the US and Iran held off attacks following almost two weeks of nightly US strikes on Iran and repeated missile and drone salvos targeting Washington's allies around the Gulf. Both main oil contracts rose more than four per cent on Wednesday, with Brent surging from around $72 at the start of July to over $100 last week before the pause.

The tech sector came under further pressure as traders fretted over the AI boom and questioned whether firms' lofty expectations would be met. SK Hynix's shares tanked more than 50 per cent since hitting a record high a month ago, with its operating profit and revenue coming in below expectations despite a forecast-beating net profit.

The Federal Reserve's policy decision later in the day will also be closely watched, with some observers warning of a possible hawkish surprise. New boss Kevin Warsh has refused to publicly share his views on the economic outlook, part of his proposed reforms to reduce the amount of forward guidance the central bank offers.