Oil prices spiked Monday on Middle East supply fears after Saudi Arabia closed a key pipeline, putting further upward pressure on inflation ahead of an expected Federal Reserve rate hike this week.
The prospect of higher US borrowing costs compounded a tech selloff that came after leaders of companies at the forefront of the Artificial Intelligence boom backed calls for a slowdown in development in the sector amid warnings that it could pose a threat to humanity.
Both main crude contracts — already sitting above $100 a barrel — jumped more than three per cent at one point Monday after Riyadh shut its East-West pipeline following drone attacks by Yemen’s Houthi rebels, while a merchant vessel was struck in the Strait of Hormuz.
The Houthis have been cementing their hold on the Bab Al-Mandab strait, a vital shipping corridor linking Europe and Asia that has been used as an alternative to Hormuz.
Average diesel prices in the United States topped $6 a gallon on Friday for the first time, a shock increase for a key fuel in the transport and agriculture sectors.
