Step one: the premium
When a threat to supply appears, oil rises before any barrel is lost. Traders pay extra for protection against the chance of a real disruption. That extra is the risk premium.
Step two: inflation expectations
Oil reaches fuel, transport and food prices quickly. Markets move their inflation expectations up almost at once, well before any official inflation data changes.
Step three: the rate path
Higher expected inflation makes more central bank hikes likely. Futures pricing for the next meetings shifts, and yields usually follow.
Step four: everything priced against rates
Growth stocks, gold and bitcoin all react to the new rate path. This is how a drone over the Arabian desert can move bitcoin in Tokyo within hours.
The chain can break at any step. If a stock selloff sends money into Treasuries, yields can fall even as oil rises, which is exactly what happened on 22 October 2026.