Shares slip in Asia as oil climbs, rate hikes loom

Share markets are on the slide in Asia as supply concerns cause oil prices to spike anew, while investors bracing for possible interest rate hikes in both the United States and Japan this week.

Brent climbed three per cent as new strikes on Saudi Arabia and on ships in the Gulf tested nerves, after an attack on a Saudi oil pipeline and an advance by Yemen's Houthis threatened to worsen the wartime disruption to global energy supplies.

A meeting in Oman between Iran and Gulf Arab states, scheduled for Monday to discuss a deal on opening the Strait of Hormuz, was postponed.

With shipping through the strait and the Bab el-Mandeb under threat, analysts fear oil prices could stay elevated for a lengthy period, stoking inflation globally.

An uncomfortably hot US consumer price report on Friday led markets to price in an 86 per cent chance the Federal Reserve will lift rates by 25 basis points on Wednesday, and move again by December. It would be the first hike since mid-2023.

"We now expect the Fed to hike twice this year, in September and December," said Michael Feroli, chief US economist at JPMorgan.

"At this stage, failing to back up words with action could put the credibility of the institution at risk."

"Whether these actions represent a limited recalibration or mark the start of a more sustained hiking cycle will depend on incoming data," he added.

Brent futures were last up 3.1 per cent at $US107.84 ($A150.60) a barrel, having gained almost 9 per cent last week, while US crude rose 2.8 per cent to $US102.85 ($A143.63) a barrel.

Nikkei futures were down two per cent at 63,260 on Monday, compared with a cash close of 64,011. On Wall Street, S&P 500 futures lost 0.5 per cent, while Nasdaq futures fell 1.0 per cent.

Treasury futures were a shade firmer in early trading, having been sold heavily in recent weeks.

Just last week alone, two-year yields rose a steep 26 basis points over the week, while 10-year yields added 19 basis points as the curve flattened.

Ben Snider, chief US equity strategist at Goldman Sachs, said strong corporate earnings should provide support for Wall Street if borrowing costs rise.

"Equities typically struggle when the Fed starts to hike rates, but we expect the bull market to continue," he added.