US-Iran deadlock pushes oil higher, Seoul falls on calls for AI social tax

AFP , Tuesday 12 May 2026

Oil prices climbed on Tuesday as US-Iran talks stalled, while South Korean calls for a social tax on AI profits dragged down the tech-rich Kospi index.

File Photo: Oil tankers and cargo ships line up in the Strait of Hormuz as seen from Khor Fakkan, United Arab Emirates. AP

Seoul plunged five per cent after a top official proposed a "national dividend" to redistribute excess corporate profits from artificial intelligence.

South Korea is riding an AI chip boom, driving massive earnings for tech giants Samsung and SK hynix, which have sent the Kospi to record highs in recent weeks.

Southeast Asia's biggest economy, Indonesia, also took a hit, with Jakarta falling two per cent at one point after the rupiah hit a record low against the dollar.

Hong Kong, Shanghai, Sydney, Bangkok, Manila and Singapore were marginally down, while London, Paris and Frankfurt also opened in the red.

Taipei and Kuala Lumpur posted marginal gains.

Tokyo closed 0.5 per cent higher after Finance Minister Satsuki Katayama said Japan and the United States were "coordinating very well" on currency policy during Treasury Secretary Scott Bessent's visit.

The mixed picture follows US President Donald Trump's warning that the US-Iran ceasefire was "unbelievably weak" after Tehran rejected his administration's proposal to ease the conflict.

The impasse, which leaves the vital Strait of Hormuz mostly closed to oil tanker traffic, unnerved global energy markets.

The international benchmark Brent crude jumped 2.2 per cent to $106 a barrel, while US benchmark West Texas Intermediate rose 2.7 per cent to $100 a barrel.

Wait and see

Traders are now looking to Beijing, where Trump lands this week to meet President Xi Jinping, the first visit by a US president since his own in 2017.

Taiwan, tariffs, rare earths and the war in Iran are set to top the agenda, while top executives, including Tesla boss Elon Musk and Apple's Tim Cook, will fly in to back Trump's push to ramp up trade with Beijing.

Iranian officials will be keeping a close eye on Trump's visit, where he is expected to press Xi -- whose country is a major buyer of Iranian oil.

Analysts said traders were in a wait-and-see mode as the war crept towards its three-month mark.

"For now, President Trump is still talking about the idea that the ceasefire is on a 'massive life support'," analyst Rodrigo Catril told the NAB Morning Call podcast, referring to comments to reporters on Monday.

"The theme, I think, for markets is that as much as President Trump is not happy with what is on offer, he's also not suggesting that there's going to be an escalation."

US stocks held modest gains in Monday's trade, finishing a meandering session marginally higher as enthusiasm about artificial intelligence managed to offset concerns about higher oil prices.

But analysts have warned crude prices could spike dramatically if the war drags on into next month as supplies dwindle.

"Beneath the surface calm sits a market increasingly dependent on the assumption that the Strait of Hormuz will gradually reopen sometime before late June," said Stephen Innes, analyst with SPI Asset Management.

"An extended disruption (to traffic in the strait) would almost certainly force oil prices materially higher, tighten global financial conditions, and inflict far more serious economic damage than markets currently price in," he said.