Oil surges, Treasury yields hit 19-year high as US-Iran strikes resume

Energy prices and long-term US borrowing costs rose sharply after renewed military exchanges between the United States and Iran. The 30-year Treasury yield climbed 14 basis points to nearly 5.24 percent, its highest level since 2007, following the Federal Reserve’s decision to keep its policy rate between 3.5 percent and 3.75 percent. Oil markets reacted to supply concerns, with Brent crude jumping 7.3 percent above $88 a barrel.

The Fed’s choice to hold rates for a fifth consecutive meeting came as inflation stood at a 3.5 percent annual rate in June. Chair Kevin Warsh stated the committee’s sole target remains 2 percent and that it would not accept any higher implicit goal. Market pricing for a September rate increase fell from near certainty before the announcement to roughly 57 percent afterward, according to CME Group data.

Shell reported adjusted second-quarter earnings of $9.84 billion, exceeding analyst forecasts of $8.79 billion to $8.92 billion and marking the company’s strongest quarter since 2022. The result reflected higher realized prices in oil and gas. Cash flow from operations reached $21.4 billion, net debt fell to $41.75 billion, and the firm kept its $3 billion quarterly buyback program in place.

US Central Command said it struck dozens of Iranian Revolutionary Guards targets over two hours in response to an Iranian attack on a US base in Jordan. The action followed a brief pause in hostilities and came after earlier US strikes on Iran-backed groups in Iraq that killed at least 20 fighters and six advisers. US stocks declined, with the S&P 500 down 1.5 percent, the Dow Jones industrial average off 2.2 percent, and the Nasdaq lower by 1.7 percent.

Analysts noted that elevated bond yields themselves may already be tightening financial conditions, potentially reducing the immediate need for further policy tightening. Capital expenditure guidance for Shell remained unchanged at $24 billion to $26 billion for the year.