Morning Bid Europe-Oil batters bonds as AI burns cash

We are back to war watching, as if the June ceasefire never happened. After weeks of dozing through simmering U.S.-Iran tensions, investors got a rude awakening overnight: oil prices surged 7% to top $100 a barrel, and inflation is again on everyone's list of fears.

The shock came from the Red Sea, where Iran-aligned Houthis attacked two Saudi oil tankers, threatening to choke off another vital Middle East artery for global oil supplies. President Donald Trump was not subtle, threatening "major military punishment" and fuelling fears the conflict is widening.

With the world already running low on oil reserves, the risk is that a protracted energy shock stokes global inflation and de-anchors inflation expectations, a central bank's nightmare. Brent is up nearly 40% this month.