Oil extends gains as traders reassess supply risks, inflation outlook, path for interest rates

• Oil climbed for fourth straight session, gaining more than $1 early Wednesday.
• Houthi strikes hit several Saudi cities as US-Iran fighting spread across region.
• Asian markets were mixed as higher oil prices revived inflation concerns.

Brent crude rallied towards $100 a barrel on Wednesday, keeping the mood in Asian stock markets subdued as attacks intensified in the Middle East, stoking inflation concerns ahead of the release of closely watched US consumer price data.

The yen strengthened towards the nearly seven-month high it touched against the dollar on Tuesday as traders exited short positions in the Japanese currency amid expectations of faster Bank of Japan interest rate hikes and a potential rush of repatriation of Japanese capital.

The euro edged higher ahead of the European Central Bank's policy decision on Thursday, with markets widely expecting a rate hike amid inflationary pressures stemming from the Iran war.

Iranian-backed Houthis in Yemen launched strikes on several Saudi cities on Tuesday, further embroiling a US ally in the conflict, while US forces hit multiple Iranian oil tankers and Iran struck a US base in Jordan.

Oil prices jumped for a fourth straight session on Wednesday, gaining more than $1 in early trade.

Brent crude futures rose $1.57 to $99.49 a barrel, their highest level since late June. US West Texas Intermediate crude was at $94.63 a barrel, up $1.60.

Stocks in Sydney slipped around 0.3%, while Hong Kong's Hang Seng Index dropped 0.6% and mainland Chinese blue chips edged up 0.2%.

A rebound in chip and artificial intelligence stocks helped some other regional benchmarks, however, with Japan's Nikkei up 0.6% following Tuesday's 1.7% tumble. South Korea's KOSPI jumped 1.6% and Taiwan's TAIEX rose 0.6%.

Japanese cable makers surged after Verizon and Corning signed a deal on high-density optical fibre.

Overnight, the Philadelphia Semiconductor Index jumped 1.3%, despite declines on Wall Street's three main indexes.

US S&P 500 futures added 0.1%, after the cash index sank 0.6% on Tuesday.

"Across several of the major macro markets, we see indecision in the price action -- tight ranges and a general holding/consolidation pattern," Chris Weston, head of research at Pepperstone, wrote in a client note.

Brent crude is currently "one of the clearest real-time signals for sentiment" for the overall market, and $100 "now feels like a highly achievable level", he said.

Inflation worries have weighed on global equities in recent weeks and lifted bond yields as traders price in higher odds of central bank tightening.

US CPI data is due on Friday.

Traders assign close to even odds of a quarter-point hike or a hold from the US Federal Reserve on Wednesday of next week, while being all but certain of a quarter-point increase from the Bank of Japan two days later.

The yen strengthened around 0.2% to 153.66 per dollar, edging back towards its high of 152.89 from the previous session. It had surged around 4% over the last five sessions, with hawkish comments from Bank of Japan officials ostensibly initiating a move that then snowballed as breaks of key levels triggered additional buying, market players said.

The European Central Bank is all but certain to raise euro zone rates by a quarter point on Thursday.

The euro added 0.1% to $1.1629, putting it in the middle of its tight range of the past three weeks.

Sterling was little changed at $1.3545, with the Bank of England due to announce its latest policy decision on Thursday of next week. Economists predict the key rate will be held for the remainder of this year.

The Australian dollar rose 0.1% to $0.7222.Bitcoin drifted higher to trade at $78,680.60. Gold gained 0.3% to around $4,368 an ounce.