Oil climbs 3% as Middle East supply risks pressure Asian shares

  • Asian shares and U.S. equity futures fell as oil prices rose on Middle East supply concerns.
  • Brent gained 3.1% to $107.84 a barrel after rising almost 9% last week.
  • Markets priced an 86% chance of a Fed hike and 76% chance of BOJ tightening.

Asian shares and U.S. equity futures fell as renewed Middle East supply risks pushed Brent crude 3.1% higher to $107.84 a barrel. New strikes targeting Saudi Arabia and ships in the Gulf, alongside an attack on a Saudi oil pipeline and advances by Yemen's Houthis, raised concerns that disruptions to energy flows could persist. A planned Oman meeting between Iran and Gulf Arab states on opening the Strait of Hormuz was postponed. Markets priced an 86% chance of a 25-basis-point Federal Reserve hike on Wednesday, potentially followed by another increase in December, and a 76% chance that the Bank of Japan will raise its cash rate to 1.25% on Friday. Higher bond yields have tested equity valuations, although Goldman Sachs said corporate earnings could support stocks and projected the bull market would continue. Gold slipped as rising yields reduced demand for the non-interest-paying metal.

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