UK government bonds are set to endure their worst monthly performance since the historic selloff triggered by former Prime Minister Liz Truss's economic policies, driven by surging energy costs following the Middle East conflict escalation.

This sharp rise in yields reflects market fears that higher energy prices will fuel persistent inflation, forcing the Bank of England to maintain aggressive interest rate hikes longer than anticipated. The conflict in the region has significantly tightened global oil supplies, pushing Brent crude above $90 per barrel and directly impacting UK energy import bills.

Investors are now pricing in prolonged higher borrowing costs, which could dampen economic growth and corporate profits. The worst month since Liz Truss underscores the fragile state of UK fiscal policy and the market's sensitivity to geopolitical shocks affecting energy markets.