Crude oil prices jump above $107 a barrel as Middle East conflict and government borrowing concerns drive global bond sell-off
Crude oil prices rose 6% to exceed $107 a barrel on Thursday, driven by concerns that Houthi rebel advances along the Red Sea coast in Yemen could disrupt Saudi crude exports. This price surge, combined with escalating concerns over government borrowing, triggered a global bond sell-off.
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Investors responded to the news by dumping government bonds, which increased the cost of borrowing across major economies. In the United Kingdom, the 10-year government bond yield surged above 5.37%, the highest level since 2007. UK Chancellor John Healey committed to controlling borrowing to reduce long-term pressures on public finances and address inflation. Meanwhile, in the United States, the 10-year yield reached 4.92%, the highest since 2023. The European Central Bank raised its main interest rate to 2.5% on Thursday. President Christine Lagarde stated that inflation is expected to remain above target for an extended period due to Middle East conflict pressures. In the United States, the Federal Reserve will meet next week to set interest rates, with markets expecting a rise despite demands from Donald Trump for rate cuts.