Ahmad Assiri Research Strategist at Pepperstone

(MENAFN- Your Mind Media ) Oil markets are increasingly reflecting stress in the physical market far more than just futures positioning, with some crude brent reportedly changing hands in the $130 to $140 per barrel range amid the continued geopolitical and supply concerns. That shift is beginning to feed even more directly into broader macro pricing dynamics particularly in rates markets, where investors are reassessing the inflation outlook.

The move higher in front-end Treasury yields, especially across the 2-year and 5-year maturities, suggests markets are becoming seriously cautious about the risk of price pressures tied to energy and logistics disruptions. Investors appear to be positioning for a scenario where elevated oil prices could reverse the pace of monetary easing and keep inflation more persistent than previously expected with now data suggesting watermark around the 4% level.

What matters now is that markets are treating the energy shock beyond the temporary headline risk and as a 2027 story as well. Instead, pricing behaviour increasingly points to concern around a sustained repricing of global energy costs and its broader impact on inflation expectations and policy outlooks.

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