What is the realtionship between the bond market, the oil price and the value of the dollar.
International & regional bodies
The IMF's reserve data show the dollar's share of world foreign-exchange reserves rose to 57.13% in early 2026. About half of that rise came from the dollar's mild appreciation, and changes in bond yields altered the value of reserve managers' bond holdings. OPEC's bulletin records that oil prices have long been adjusted against movements in the US dollar.
News & reporting
CNBC reports that the 2026 Iran war cut energy shipments, drove oil prices sharply up and raised fears of faster inflation worldwide. Al-Waie argues that energy costs push up prices generally, and that a strong dollar exports inflation to countries that import goods priced in dollars.
Justice Council Political Analysis
The links, from strongest to weakest: (1) higher oil prices raise inflation, which pushes up interest rates and bond yields and lowers bond prices (probable); (2) because oil is priced in dollars, a stronger dollar makes oil dearer for importing countries (probable); (3) oil earnings recycled into US Treasuries have historically supported demand for both the dollar and US bonds, but whether that support is now eroding is disputed (contested).
Reopening Hormuz and Bab el-Mandeb through a negotiated ceasefire would remove the oil shock that is feeding rates. Over the longer term, importing countries can reduce their exposure through more varied currency and energy arrangements.
Conclusion
The three move as a chain. A rise in oil prices feeds inflation, inflation pushes interest rates and bond yields up, and higher yields mean lower bond prices and dearer mortgages and government borrowing. Because oil is priced in dollars, a stronger dollar makes oil more expensive outside the US. Recycling oil revenue into US Treasuries has historically propped up both the dollar and the bond market, but the sources disagree on whether the 2026 Iran war has weakened that support.