Oil jumps on stalled Middle East​ peace talks

Benchmark Brent crude futures rose nearly 2% to hit a three-week high of $107.97 a barrel in Asia trade

Oil jumped on Monday as stalled ​Iran-U.S. peace talks prolonged the disruption of Middle East energy exports, while renewed excitement about artificial intelligence spending drove up chip stocks ‌at the beginning of a week where war, central banks and tech earnings are in focus.

Benchmark Brent crude futures rose nearly 2% to hit a three-week high of $107.97 a barrel in Asia trade, a level that has stoked inflation worries and prompted traders to all but price out rate cuts in some markets this year.

S&P 500 futures wobbled in the Asia session but tacked ​on small gains of nearly 0.2% after markets in Taiwan, Tokyo and Seoul notched record highs on a new ​wave of AI optimism.

Currency trading was broadly steady – with the euro at $1.1724 and yen at 159.32 per dollar. Bond ⁠markets were calm ahead of central bank meetings in Brazil, Japan, Canada, Europe, U.S. and Britain.

The average LNG price for June delivery into northeast Asia was $16.70 per million British thermal units last week, nearly 61% above pre-war levels.

Goldman Sachs analysts lifted year-end oil price forecasts sharply from $80 to $90 a barrel for Brent, and even that rests on normalisation of Gulf exports by the end of June.

Non-linear price increases ​are likely if inventories drop to critically low levels, which we have not seen in the last few decades, they warned in a note.

Beyond oil derivatives and the even more stretched physical market where jet fuel fetches $185 a barrel in Singapore, equity investors have hoped for a breakthrough and tried to look past the oil shock to an AI trend that is seen as unstoppable.

AI is something that people are very optimistic about and very much considered a winner, said Mike Seidenberg, senior portfolio manager for Allianz Technology Trust. It’s ​the top of the portfolio.