Oil Prices Soar as Global Energy Supply Shock Takes Hold

The Middle East conflict has triggered an unprecedented global energy supply shock, causing oil prices to surge and the 'anchor of asset pricing', the 10-year U.S. Treasury note yield, to reach its highest level since 2007.

Saudi Arabia's East, West Pipeline was attacked and shut down in late September, disrupting shipments bypassing the Strait of Hormuz and adding to the market's concerns about global oil supplies.

The resulting energy shock has dealt a severe blow to equity markets and risk assets, causing a sharp increase in 10-year Treasury yields that has favored high-quality fixed-income assets with robust cash flows.