Japanese investors sold foreign bonds at the fastest pace in nearly three months in the week ended July 18 as rising oil prices rekindled inflation concerns and reinforced expectations that global interest rates could remain elevated for longer, according to Reuters, citing data released by Japan's Ministry of Finance.Data released on Friday showed Japanese investors were net sellers of 970.5 billion yen ($5.92 billion) worth of foreign bonds during the week, marking their largest weekly net divestment since April 25.The selling was led by long-term debt securities, with investors offloading a net 714.4 billion yen, while net sales of short-term foreign bills stood at 256.1 billion yen.Oil price surge fuels bond selloffThe sharp reduction in overseas bond holdings came as global markets reacted to a renewed spike in crude oil prices. According to Reuters, benchmark Brent crude surged 15.9% last week and climbed above the $100-a-barrel mark on Wednesday for the first time since May after reports that Yemen's Houthi rebels attacked two Saudi oil tankers in the Red Sea.Higher oil prices have intensified concerns that inflationary pressures could persist, prompting central banks to keep interest rates higher for longer.Japanese investors turn net sellers of foreign equitiesJapanese investors also turned net sellers of foreign equities for the first time in five weeks, offloading a net 121.3 billion yen worth of overseas stocks during the reporting week.The shift in sentiment came amid a broader global selloff in semiconductor stocks, which weighed on equity markets.Foreign investors reduce exposure to Japanese assetsForeign investors, meanwhile, reduced their holdings of Japanese bonds, recording net outflows of 490.7 billion yen during the week, the largest weekly outflow in three weeks.The data showed foreigners sold a net 185.1 billion yen of long-term Japanese bonds and 305.6 billion yen of short-term bills.Foreign investors also turned net sellers of Japanese equities, offloading 79.5 billion yen worth of shares after purchasing a net 742.6 billion yen in the previous week.Rising oil prices keep investors on edgeThe latest cross-border investment flows underscore growing investor caution as geopolitical tensions in the Middle East push energy prices higher. The rebound in crude oil has revived fears of persistent inflation, raising the prospect that major central banks may delay interest-rate cuts or maintain restrictive monetary policies for longer. As a result, investors are reassessing allocations across global bond and equity markets.