Australian bond prices have fallen, tracking losses in US Treasuries overnight, as rising oil prices driven by escalating Middle East tensions fueled inflation concerns.

The yield on Australia's 3-year government bonds surged as much as 18 basis points to 5.03%, while the 10-year yield climbed 13 basis points to 5.38%. Both levels mark the highest since May 2011.

The selloff in Australian bonds mirrors a sharp decline in the US bond market, where losses accelerated on Thursday amid worries that higher crude prices could stoke inflation. Additionally, the US Treasury purchased fewer bonds than expected in its first expanded buyback operation, adding further pressure to the market.