MW U.S. assets and gold are being sold offshore as the world scrambles to afford higher oil prices
By Joy Wiltermuth
Wall Street is bracing for a 30-year Treasury auction this week
Ho Chi Minh City in Vietnam. The country is seeing growing economic pressure on workers who rely on motorcycles for their livelihoods, due to fluctuating fuel prices resulting from the Iran conflict.
It's six weeks into the Iran war, and foreign countries have begun selling U.S. assets and gold to afford the cost of higher oil prices.
The oil shock has already prompted many Asian, European, African and South American nations to roll out measures to conserve energy, cap fuel prices and offer public subsidies to offset the historic supply crunch.
It's also led several countries scrambling to raise cash by selling what they can to pay for increased energy costs.
"A lot of countries are in a bit of a double bind," said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. Not only have oil prices surged, but many local currencies have fallen in value, making their money stretch less further, he said. By selling reserves to raise cash, the hope is to cap the depreciation of their home currencies.
U.S. benchmark West Texas Intermediate crude-oil prices (CL00) (CL.1) were above $112 a barrel on Monday, surging 97% on the year so far, while global benchmark Brent crude (BRN00) was near $110 a barrel, or 80% higher in 2026, according to FactSet data.
The spike in crude prices and a strengthening dollar DXY has pinched liquidity overseas, while similar pressures in the U.S. have been fairly muted so far, said Wells Fargo's Christopher. Yet the longer oil prices stay high, the greater the odds of liquidity problems coming home to roost.
Turkey already tapped some of its gold reserves since the Iran war began in late February, while Poland has plans to do so in the future, as MarketWatch's Myra Saefong recently reported.
Read: Some central banks have been selling their gold. That doesn't mean you should too.
Russia's invasion of Ukraine in 2022 led to more sanctions against Moscow, which also prompted global central banks to increase their gold holdings as a way to diversify away from dollars. That helped gold prices (GC00) top $5,300 an ounce for the first time in history in late January. Prices are up 54% from a year ago, but down 9.4% in the past month, according to FactSet.
In addition to selling gold, some foreign entities have sold their Treasury holdings since the U.S and Israel attacked Iran on Feb. 28. While the war prompted some bond selling, Bob Savage, head of markets macro strategy at BNY, said the selling hasn't been extraordinary, especially when looking at the long-run average holdings across all foreign and domestic investors.
Foreign holdings of Treasurys.
The selling has been concentrated in "front-end" Treasurys, Savage said, where an inflation shock or Federal Reserve interest-rate hikes could be the most damaging. Foreign holders also may have been on the wrong side of recent interest-rate bets, he said, noting that the unwinding began as the war triggered a spike in Treasury yields.
The benchmark 10-year Treasury yield BX:TMUBMUSD10Y was at 4.333% on Monday, while the 2-year yield BX:TMUBMUSD02Y was at 3.848%. That represents a jump of about 40 and 50 basis points, respectively, from their late February lows, according to Dow Jones Market Data. Bond yields and prices move in the opposite direction.
"When do we care about interest rates and oil?" Savage asked. "It's when our ability to raise capital using these bonds becomes a problem."
That could be tested by an auction of 30-year Treasurys BX:TMUBMUSD30Y set for Thursday. Higher bond yields make it more expensive for governments to borrow, but they can also entice some investors to keep their capital at home instead of deploying it in U.S. government bonds.
The hope on Wall Street is that bond yields and U.S. borrowing costs will recede after the crucial Strait of Hormuz resumes as a central transit point for the world's crude-oil supplies - though analysts warn it could be a messy process.
Read: Strait of Hormuz sees increased ship traffic ahead of Trump's deadline. Here's why oil prices are not budging.
The team at the Wells Fargo Investment Institute has a base case that sees a reopening of the Strait of Hormuz occur relatively soon, as well as limited damage to Middle Eastern energy infrastructure. Christopher pointed to a buildup of specialized U.S. military forces in the Middle East that could potentially help secure the areas around the strait as part of his team's thinking.
Yet if the U.S. military fails to secure the Strait of Hormuz, or Iran remains capable of shooting missiles and threatening damage to tankers, then oil prices would likely push higher.
"We have to wait to see how things develop," Christopher said.
Iran reportedly has rejected a proposed 45-day cease-fire with the U.S., while President Trump reiterated his 8 p.m. Eastern time deadline on Tuesday for Tehran to reopen the Strait of Hormuz, or else face potential U.S. military strikes against its bridges and power plants.
-Joy Wiltermuth
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(END) Dow Jones Newswires
April 07, 2026 07:30 ET (11:30 GMT)
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