Oil gains on Middle East supply fear

Oil prices surged on Monday, driven by concerns over Middle East supply disruptions following Saudi Arabia's shutdown of a crucial pipeline amid regional conflict. Worries about heightened inflation prompted the US Federal Reserve to consider an interest rate hike this week, contributing to a fresh decline in technology stocks in Asia. Simultaneously, average US diesel prices reached a record high of over $6.0 per gallon.

The Fed's anticipated decision on Wednesday added to the pressure on the dollar, while European stock markets experienced a mixed performance, with London showing gains due to the region's limited exposure to the tech sector. Oil executives have called for a cautious approach in the development of artificial intelligence, citing potential risks to humanity. Anthropic CEO Dario Amodei recently urged companies to slow down AI advancements, emphasizing the need for greater prudence.

Investors faced a "double headache" as rising bond yields and stagnating equity markets fueled existing inflation concerns. The US consumer price index data remained elevated last week, further intensifying these worries. Both primary crude contracts, already trading above $100 a barrel, experienced significant gains after Saudi Arabia closed the East-West pipeline following drone attacks by Yemen's Houthis and a merchant vessel attack in the Strait of Hormuz.

By 10 a.m. on Monday, North Sea Brent crude reached $107.71 per barrel, while West Texas Intermediate increased by 2.9 percent to $102.90 per barrel.