Oil prices jump 4% after Middle East flare-up

Oil prices rose more than four percent on Wednesday after renewed Middle East fighting revived supply fears around the Strait of Hormuz, while South Korean and other Asian chip shares extended an AI-linked sell-off.

At about 0230 GMT, West Texas Intermediate was up 4.3 percent at $82.68 a barrel and Brent North Sea crude was up 4.3 percent at $87.73. The Strait of Hormuz is the route for about a fifth of global crude and gas supplies.

The US military said US and Saudi warplanes carried out strikes on Tuesday against Iran-backed militants in Iraq after more than two dozen drone attacks in recent days. US Central Command said the strikes targeted Iran-aligned militants that it said the Islamic Revolutionary Guard Corps had directed to attack US forces and Saudi energy infrastructure.

CENTCOM also said Tehran launched multiple ballistic missiles in an attempted surprise attack on US forces in the Middle East and that all were intercepted. Iran said on Wednesday that it had halted three oil tankers in the strait.

The developments ended three days of calm after the United States and Iran had 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.

In equities, Seoul's Kospi was down 6.0 percent at 5,662.15, extending Tuesday's near-11 percent fall. SK hynix dropped 10 percent and Samsung fell more than six percent. SK hynix reported April-June results including a 1,242 percent rise in net profit, and its shares have fallen more than 50 percent since hitting a record high a month ago.

The sell-off also hit Tokyo technology shares, including Kioxia, Advantest and Tokyo Electron. Taipei fell nearly three percent as TSMC retreated. Shanghai also fell, while Sydney, Singapore, Wellington, Manila and Jakarta gained.

Technology news outlet The Information reported that China's Shanghai Yuliangsheng had started mass production of chipmaking technology long dominated by Dutch firm ASML. Investors have also been questioning whether heavy spending on artificial intelligence will deliver the returns expected by chip and technology companies.

Traders were also watching the Federal Reserve's policy decision later Wednesday. Most traders expected rates to remain unchanged, but Matt Weller of City Index said markets would look for stronger language on inflation risks or possible signs of conditional tightening.