New York CNN Business —  

Tensions between the United States and Saudi Arabia over the disappearance of journalist Jamal Khashoggi could have a big impact on oil prices.

But will it affect the bond market and interest rates? That’s unlikely.

Saudi Arabia held $166.8 billion in Treasury securities as of July, According to the US Treasury Department. That made it the 10th largest foreign holder of government bonds – ahead of larger economies such as India, France, Canada and Germany.

So if Saudi Arabia wanted to inflict pain on the United States, it could – in theory – weaponize those bonds by selling them off en masse. Adding a bigger chunk of bonds to the market could push yields, which move in the opposite direction of prices – sharply higher.

A spike in bond yields could make it more expensive for consumers to take out mortgages and other loans and also increase the interest costs that companies have to pay on their existing debt.

But this assumes that there wouldn’t be other investors lining up to buy the bonds that the Saudis would be selling. That seems unlikely, experts said.

What’s more, while $166.8 billion may sound like a large amount of bonds, it actually isn’t. Saudi Arabia’s holdings pale in comparison to China’s and Japan’s. Both of those Asian nations hold more than $1 trillion in US Treasuries.

Lisa Hornby, US fixed income portfolio manager with Schroders, said it’s possible that Saudi Arabia may hold more in Treasuries than is reported.

That’s because several smaller countries like Ireland, Belgium, Luxembourg, Switzerland and the Cayman Islands have fairly large Treasury holdings, according to the US government data.

Some nations, including China and Saudi Arabia may hold more Treasury bonds in custodial accounts in these tax-friendly nations.

“That $166.8 billion number, if anything, is probably not lower,” Hornby said, suggesting that it’s either the same or higher.

But Hornby doubts that Saudi Arabia would want to shoot itself in the foot by dumping bonds since a fire sale would depress the value of its remaining holdings.

It would be foolish for the Saudis to sell US assets like bonds since oil is priced in US dollars, Hornby said. Higher oil prices might result in higher Treasury yields and this would impact the value of their portfolio.

“It is not in Saudi Arabia’s best interest to do a large scale Treasury selling program,” Hornby said. “Most oil is still denominated in US dollars so it makes more sense for [Saudi Arabia] to continue to have investments in the US.”

Bigger global factors moving bonds than Saudi Arabia

Bruce Monrad, chairman of Northeast Investors Trust, added that there are so many geopolitical factors influencing the bond market right now that any major Saudi sales might not even get noticed.

Monrad said bond investors are far more focused on the US-China trade war, Italian budget concerns and Brexit.

“I’m not too worried that any Saudi bond sales would move the needle on interest rates,” Monrad said. If Saudi Arabia were to sell its Treasuries, it “begs the question of where they’d go,” he said.

The United States has the most attractive economy in the world right now, which is why both China and Japan are still big backers of US debt.