Crude jumps above $107 a barrel amid concerns over Middle East conflict and out-of-control government borrowing

Nervous investors across big economies have been dumping government bonds, driving up the cost of borrowing, as surging oil prices amplified fears about rising inflation.

The cost of a barrel of oil jumped 6% to above $107 on Thursday amid concerns that advances by Houthi rebels along the Red Sea coast in Yemen could choke off Saudi crude exports.

Concerns over rising inflation, continuing war with Iran, and the US’s record national debt have shaken the market

Americans who have been grappling with the higher cost of living over the last few years now face another issue: trouble in the US bond market that could mean elevated costs are here to stay.

US government bonds – known as treasuries – are supposed to be the most stable type of investment vehicle. But investor concerns over issues including rising inflation, the continuing war with Iran, and the US’s record national debt have shaken the market and slowed demand for US treasury bonds.

Scott Bessent made announcement on Wednesday as bond yields rose to highest point since 2008 financial crisis

The US treasury moved to cut the cost of borrowing on Wednesday only to be swiftly rebuffed by the bond market.

Scott Bessent, the treasury secretary, announced the US would buy back $6bn worth of government debt – treasuries – in an effort to alleviate a selloff in the US bond market that has put pressure on interest rates.