Q1 2026 Economic Commentary

Seeking Safe Passage

Conflict in the Middle East is dominating headlines, economies and markets, with its fast-moving nature, shifting objectives, and unpredictability reshaping inflation and interest rate expectations.

At the centre of this dynamic is the sharp rise in energy prices. While the crude oil price (+87% year to date) has captured headlines, the more acute stress is in refined products, where supply chains are tighter and inventories are limited. These products are critical inputs across a multitude of industries, meaning their price increases have a more immediate and widespread economic impact. Shortages in Asia and Europe are already emerging, reinforcing the view that this is not simply a price shock, but a supply shock with real-economy consequences.