Oil jumps above $107 a barrel on Middle East tensions; global bond markets sell off on inflation fears (September 10, 2026)

Crude oil prices jumped 6 percent to above $107 per barrel on Thursday, driven by Houthi rebel advances along the Red Sea coast in Yemen that could choke off Saudi crude exports, according to the Guardian's reporting. Higher oil prices, which had already climbed since hostilities resumed in the Iran war, are expected to drive up inflation across the G7 economies. The spike triggered a global bond sell-off as investors dumped government debt on fears of sustained inflation and rising interest rates. In the United Kingdom, the yield on 10-year government bonds surged above 5.37 percent, the highest cost of borrowing since 2007, per the Guardian's reporting. In the United States, the sell-off pushed up the yield on 10-year borrowing to 4.92 percent, the highest since 2023. Thirty-year yields in the U.S. hit the highest level since 2007. Central banks responded by signaling tighter monetary policy. The European Central Bank raised its main interest rate to 2.5 percent on Thursday. ECB President Christine Lagarde said: "We believe inflation will be longer lasting than we had anticipated." Lagarde added: "The conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period." The oil jump is already flowing into consumer prices. Unleaded petrol prices in the United Kingdom have risen by 6p per litre since the start of September, according to the motoring organisation the RAC. U.S. Treasury Secretary Scott Bessent intervened directly in debt markets on Wednesday, hoping to bring down yields by buying back $6 billion worth of government debt. However, investors appeared to respond to Bessent's buyback by deepening the sell-off, according to the Guardian's reporting. Kyle Rodda, a senior financial market analyst at the broker Capital.com, said: "Ultimately, a sustained drop in long-end yields can only be achieved by genuine shifts in macroeconomic policy: either the US government pulling back on spending or the Fed lifting rates." Policymakers at the Federal Reserve will meet next week under its new chair, Kevin Warsh, to set interest rates. Markets are expecting a rise in Fed rates. In a TruthSocial post last week, President Trump said: "The Fed Board, with its great new leader, must get smart, BE PATRIOTS for a change," according to the Guardian's reporting. The Bank of England will also meet next week but is expected to leave the UK's key interest rate on hold at 3.75 percent, per the Guardian's reporting. In the first six months of the year, UK growth was the strongest among the G7 economies.