European government bond yields rose, with short-term yields leading the increase, as oil prices climbed toward their highest levels since the Iran conflict.

Ahead of Thursday's April interest rate decisions from the Bank of England and the European Central Bank, market pricing indicates traders expect additional rate hikes from both central banks by 2026.

For the first time in a month, swap contracts suggest markets are anticipating three 25-basis-point rate increases from the Bank of England by year-end. The probability of three rate hikes from the European Central Bank has also reached 100%.

In terms of 2-year government bond yields, the UK saw an increase of 9 basis points, Italy rose 8 basis points, and Germany advanced 7 basis points.

Benchmark Brent crude oil surged by up to 6%, surpassing $118 per barrel.

As ongoing tensions between the US and Iran in the Persian Gulf continue to restrict oil and gas transportation, markets are pricing in a longer-term supply shock.

Market data: - Germany's 10-year bond yield increased by 3 basis points to 3.09% - German bond futures fell 37.00 points to 124.77% - Italy's 10-year bond yield rose by 5 basis points to 3.93% - The yield spread between Italian and German bonds widened by 2 basis points to 84 basis points - France's 10-year bond yield climbed by 3 basis points to 3.76% - The UK's 10-year bond yield increased by 5 basis points to 5.05%