RIYADH
The Tadawul All Share Index fell 2.5 percent in early trading after drone attacks targeted a key Saudi oil pipeline, sending Brent crude futures 3.0 percent higher to $92.45 a barrel and forcing a recalibration of inflation expectations across fixed-income markets.
The ten-year U.S. Treasury yield climbed seven basis points to 4.58 percent, while the two-year rose three basis points to 4.91 percent—a modest steepening that signals bond traders are pricing in persistent energy-driven inflation. The move reflects the duration risk calculus: sustained crude strength threatens the lower-inflation thesis that has justified lower rate expectations. Emerging market bond spreads widened five basis points, a direct measure of risk-off repositioning.
Saudi Aramco confirmed temporary suspension of operations on the affected pipeline section. The company said damage assessment is underway and that initial reports indicate overall production capacity remains largely unaffected. Yet the incident exposes critical vulnerabilities in global oil infrastructure at a moment when central banks are already struggling against sticky inflation.
Federal Reserve officials have repeatedly underscored data dependency in policy decisions. Higher oil prices pose a direct threat to disinflation timelines and could delay rate cuts—a repricing that will ripple through forward guidance.
Gold rose $15 to $2,342 an ounce, and the U.S. dollar index gained 0.2 percent to 104.7, standard safe-haven moves in a risk-off environment.
The Saudi Energy Ministry is expected to issue a detailed statement later this week. OPEC+ members will address the supply outlook at their next meeting on October 1.
