Morning brief: Oil spike hits Asia, Trump's new threat, Lilly doubles down on AI

Global markets are being pulled in multiple directions as geopolitics and technology collide.

Escalating Middle East tensions are driving oil prices sharply higher, fuelling inflation fears and triggering a broad sell-off across Asian equities.

At the same time, Washington signals a delicate mix of diplomacy and threat in its Iran approach, underscoring rising geopolitical risk.

Away from the conflict, Big Pharma is accelerating its AI push, with Eli Lilly betting billions on machine-designed drugs to reshape the future of medicine.

Trump signals talks amid war escalation

US President Donald Trump said Washington has held both direct and indirect talks with Iran, describing its new leadership as “very reasonable,” even as the conflict in the Middle East intensifies.

Fresh attacks linked to Iran have hit targets across the region, including drone interceptions in Kuwait and strikes involving Israel, underscoring the widening scope of the war.

The escalating tensions have pushed oil prices sharply higher, with Brent crude climbing above $115 per barrel amid fears of supply disruptions.

Trump also signalled that the US could target Iran’s oil infrastructure if needed, highlighting the fragile balance between ongoing diplomacy and the risk of further military escalation.

Oil surges as war risk widens

Oil prices pushed higher again on Monday as the Middle East conflict intensified, with Yemen’s Iran-backed Houthis directly entering the war and launching attacks on Israel.

Brent crude climbed toward $115–$116 per barrel, while US West Texas Intermediate (WTI) moved above $100, extending last week’s sharp gains.

The rally reflects growing fears of supply disruptions, especially around key shipping routes like the Red Sea and the Strait of Hormuz.

Markets are increasingly pricing in the risk of a prolonged conflict, with analysts warning that further escalation could push oil even higher and deepen global inflation pressures.

Asian markets slide on oil shock

Asia-Pacific markets slid sharply on Monday as surging oil prices and escalating Middle East tensions rattled investor sentiment.

Japan’s Nikkei 225 dropped over 3-4%, while South Korea’s Kospi fell more than 3%, with Hong Kong’s Hang Seng also trading lower.

The sell-off comes as Brent crude hovers near $115 per barrel, fuelling concerns over inflation and slowing growth across energy-dependent Asian economies.

Investors are increasingly worried about disruptions to key oil routes like the Strait of Hormuz, with markets now pricing in prolonged geopolitical risk.

The sharp moves mirror last week’s losses on Wall Street, signalling rising global volatility as energy prices and conflict risks dominate market direction.

Lilly bets big on AI drugs

US pharma giant Eli Lilly has struck a deal worth up to $2.75 billion with AI biotech firm Insilico Medicine to bring machine-developed drugs to the global market.

The agreement includes an upfront payment of $115 million, with additional milestone payouts tied to development, regulatory approvals, and commercial success.

Under the partnership, Lilly will gain exclusive rights to develop and commercialize multiple AI-designed drug candidates across key disease areas.

The move highlights Big Pharma’s growing bet on artificial intelligence to speed up drug discovery and cut costs.

Insilico has already developed nearly 30 drugs using AI, with several advancing into clinical trials, signalling a shift toward faster, tech-driven medicine development.