Oil surges past $90 as Hormuz traffic stalls, tech falls
Escalating US-Iran military strikes have halted tanker traffic through the Strait of Hormuz, driving Brent crude above $90 and compounding a market sell-off triggered by a new low-cost Chinese AI model.
Brent crude rose 3.2% to $90.95 per barrel on Monday morning, while US benchmark crude climbed 2.8% to $84.04. The price jump followed a ninth consecutive night of US attacks against Iran, which has retaliated by striking US allies across the Middle East. The immediate driver for traders is the near-total halt of tanker traffic through the Strait of Hormuz, a critical chokepoint for global energy supplies.
The sudden stoppage in the Persian Gulf presents a severe risk to global energy supply chains, with Europe highly exposed to any disruption in Middle Eastern crude. A prolonged closure would complicate the inflation outlook across European economies and challenge expectations for further interest rate cuts. “The US and Iran continue to exchange strikes, which are proving to be deadly for both sides,” wrote ING commodities strategists Warren Patterson and Ewa Manthey in a Monday commentary. They warned that "if this escalation goes unchecked, we could return to an environment of widespread attacks across the Persian Gulf."
A second front in the markets
While energy prices surged, equity markets faced downward pressure from a sharp decline in AI-related and chipmaking shares. This tech sell-off, which pulled world markets lower on Friday, stems from growing investor scepticism regarding massive corporate AI expenditure. Fears of an overheated bubble are prompting many investors to sell and lock in profits from recent major gains. The anxiety was further compounded by the release of a powerful new Chinese AI model.
Beijing-based Moonshot AI unveiled its Kimi K3 open-source model, prompting immediate comparisons to the “DeepSeek moment” that rattled global markets in early 2025. The debut reinforced a widening consensus that lower-cost, capable Chinese models are increasingly challenging rivals like Anthropic’s Claude and OpenAI’s GPT. For European institutional investors heavily weighted in American tech equities, this introduces fresh uncertainty about the long-term returns on capital-intensive AI infrastructure.
The convergence of a physical energy shock and a technological valuation shock poses a highly unusual macroeconomic dilemma. “The return to war in the Strait of Hormuz may start to weigh more heavily on financial markets before too long, especially if even strong tech earnings reports continue to be met with scepticism,” noted Jonas Goltermann, chief markets economist at Capital Economics. Market participants are now left to navigate a landscape where inflationary pressures from crude oil collide with a potential repricing of the tech equities that have driven recent global growth.
