Crude prices surged Wednesday following a report that US intelligence suggested Israel was planning a strike on Iranian nuclear facilities, which would send geopolitical tensions into overdrive and fuel regional conflict fears.

While safe-haven gold pushed almost two per cent higher, CNN’s news appeared to have little detrimental effect on Asian equities in early trade, with most extending the previous day’s rally.

Still, investors are keeping tabs on China-US relations after Beijing hit out at Washington’s “bullying” over chip export controls, just over a week after the two sides dialled down trade tensions by temporarily slashing eye-watering tit-for-tat tariffs.

Both main crude contracts jumped almost two per cent after CNN reported multiple US officials as saying the government had received intelligence indicating Israel was preparing to target Iranian atomic facilities.

There are fears that such a sharp escalation could tip the Middle East into a war, with tensions already high over Israel’s strikes on Gaza.

“This is the clearest sign yet of how high the stakes are in the US-Iran nuclear talks and the lengths Israel may go to if Iran insists on maintaining its commercial nuclear capabilities,” Robert Rennie, at Westpac Banking Corp, told AFP.

“Crude will maintain a risk premium as long as the current talks appear to be going nowhere.”

Crude prices have risen around 15 per cent since the start of the month, reflecting softening worries about the economic outlook as tariff tensions grow relatively calmer.

Equities mostly built on Monday’s gains on trade talk hopes.

Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei and Manila all outshone Tokyo and Singapore.

But the recent detente between China and the United States suffered a jolt Wednesday when Beijing slammed Washington’s “bullying” chip export controls.

It also warned it would take steps against measures aimed at restricting Chinese access to high-tech semiconductors and supply chains.

The remarks came after US officials last week unveiled guidelines warning firms that using Chinese-made high-tech AI semiconductors, most notably tech giant Huawei’s Ascend chips, would put them at risk of violating US export controls.

Several Federal Reserve members appeared to dampen hopes they will cut US interest rates anytime soon as they warned over the effects of Trump’s tariffs on the economy and inflation.

St. Louis Fed chief Alberto Musalem warned the measures would likely hurt growth and jobs, even as countries look to dial down the blistering tariffs the president proposed.

“Even after the de-escalation of May 12 (with China), they seem likely to have a significant impact on the near-term economic outlook,” Musalem said.

“On balance, tariffs are likely to dampen economic activity and lead to some further softening of the labour market.”

He added that “committing now to ignoring higher inflation from tariffs, or to easing policy, runs the risk of underestimating the level and persistence of inflation”.

Atlanta Fed chief Raphael Bostic said Moody’s ratings cut and Trump’s proposed tax cuts could compound uncertainty and force officials to keep rates elevated.

– Key figures at around 0230 GMT –

West Texas Intermediate: UP 1.9 per cent at $63.22 per barrel

Brent North Sea Crude: UP 1.8 per cent at $66.56 per barrel

Tokyo – Nikkei 225: DOWN 0.1 per cent at 37,491.80 (break)

Hong Kong – Hang Seng Index: UP 0.5 per cent at 23,806.59

Shanghai – Composite: UP 0.2 per cent at 3,386.46

Euro/dollar: UP at $1.1322 from $1.1284 on Tuesday

Pound/dollar: UP at $1.3425 from $1.3391

Dollar/yen: DOWN at 144.07 yen from 144.47 yen

Euro/pound: UP at 84.32 pence from 84.26 pence

New York – Dow: DOWN 0.3 per cent at 42,677.24 (close)

London – FTSE 100: UP 0.9 per cent at 8,781.12 (close)