Oil prices rise and bonds wobble as Iran war stokes inflation fears

Oil prices rose and global bonds wobbled on Monday, as fresh tensions in the Middle East fed inflation fears and bets that central banks will have to increase interest rates. Brent crude, the international benchmark for oil, rose on Monday, after an attack on a nuclear power plant in the United Arab Emirates. It came as peace talks between the US and Iran stalled in the sixth week of ceasefire. Donald Trump wrote on social media: “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!”. Brent crude rose by as much as 1.77% to $111.16 a barrel, its highest level in nearly two weeks, early on Monday. However, it eased back to $110 a barrel after Iran said it had responded to a new US proposal aimed at ending the war. Iran’s foreign ministry spokesperson, Esmaeil Baqaei, said exchanges were “continuing through the Pakistani mediator”, without providing details. Global bonds were choppy, with the benchmark 10-year US Treasury yield hitting 4.631%, its highest level since February 2025, before paring back to 4.599%. In the UK, the 10-year gilt yield hit as high as 5.19%, surpassing the 18-year high it reached on Friday, before falling back to 5.15%. The volatility in UK government bonds is also being driven by political instability as traders anticipate that the prime minister, Keir Starmer, could face a leadership challenge from the Manchester mayor, Andy Burnham, later this year. …