09.03.202602:15:30UTC+00Japan 10Y Yield Climbs to 3-Week High

Japan’s 10-year government bond yield climbed to around 2.22% on Monday, a three-week high, as Brent crude surged above $100 per barrel. The move came amid mounting fears that a prolonged war in the Middle East could trigger lasting disruptions to global energy supplies, putting pressure on oil-dependent economies.

The US-Israel conflict with Iran has entered its second week with no clear resolution in sight, while major oil producers in the region have scaled back output as shipments through the Strait of Hormuz remain halted. Japan is especially exposed to such shocks, relying on the Middle East for roughly 95% of its crude oil, with about 70% of those imports passing through the Strait of Hormuz.

In response to the deepening Iran crisis, the Japanese government is weighing the option of drawing on part of its national oil reserves. These developments further complicate the policy outlook for the Bank of Japan, which must balance concerns over economic growth against rising inflation risks driven by surging energy prices.