Εβδομαδιαία Επισκόπηση: Διεθνής Οικονομία & Αγορές, 13/10/26
Global energy supply conditions are tight, with prices remaining at multi-year highs
Developments related to the global supply of major energy commodities are mixed. On the one hand, President Trump said that the US will not launch an attack on Iran by the mid-term Congressional elections (November 3rd).
In addition, US President Trump announced a deal with Russia, for the latter to partly ease its export restrictions on diesel. Note that Rusia was a major exporter of diesel, with volumes ranging from 0.82 to 0.96 million barrels per day in the past 4 years (somewhat above 10% of global exports).
These restrictions have been imposed by Russia since past July to safeguard domestic supply chains after strikes from Ukraine on refineries, have shut down part of the production. In that context, the effect of that deal on global supply will also depend on Russia being able to restore its production.
In addition, Mr. Trump also announced an agreement between Russia and Ukraine for a ceasefire of attacks on energy infrastructure. Nevertheless, President Zelenskyy noted that he is unaware of such an agreement, albeit noting that if Russia agrees on such a ceasefire, Ukraine will follow.
On the other hand, strikes against tankers attempting to pass the Strait of Hormuz or/and the Gulf of Oman appear to have intensified recently. The escalating clashes between Saudi Arabia and the Houthis, also represent risks to the energy infrastructure in the region.
The International Energy Agency encouraged the G7 countries to assess whether additional (to the ones decided on October 2nd) diesel releases could take place. In all, reference diesel prices remain at c. double their levels prior to the war in Iran, without a significant improvement.
A prolonged stalemate in the Middle East will increase downside economic and financial risks. According to the IMF baseline projections (World Economic Outlook, October 2026), the reopening of the Strait of Hormuz is assumed to resume in March 2027, with 2026 expected global real GDP growth broadly unchanged compared with three months ago at +3.1% from +3.5% in 2025.
Global equity markets were slightly up (MSCI ACWI: +0.6% wow). The S&P500 increased by +1.2% wow, with volatility in stock prices closely related to the Artificial Intelligence investment theme remaining high. The euro area equity market underperformed.
Government bond yields moved in tandem with international energy commodities. US Treasury 10-year yields ranged from 5.22% to a 22-year high of 5.36% (see “Quote of the Week”).
US federal fiscal data for September (the month which marks the end of the fiscal year), due on October 13th, will also be closely watched given a disconcerting path for federal finances. According to preliminary estimates from the Congressional Budget Office (CBO), the federal budget deficit came out at $2.0 trillion in fiscal year 2026 (at c. -6.2% of GDP according to our estimates), $218 billion above the one in fiscal year 2025 (-5.8% of GDP).
Finally, investors will closely monitor September’s US CPI inflation, due on October 14th. The Federal Reserve Bank of Cleveland’s Inflation Nowcasting model, points to an acceleration in the annual growth of the headline CPI to +3.6% (+0.5% mom) from +3.4% in August, mainly due to higher energy prices (the core is envisaged stable at +2.4% yoy, with a “norm-like” +0.2% mom).
Developments related to the global supply of major energy commodities are mixed. On the one hand, President Trump said that the US will not launch an attack on Iran by the mid-term Congressional elections (November 3rd).
In addition, US President Trump announced a deal with Russia, for the latter to partly ease its export restrictions on diesel. Note that Rusia was a major exporter of diesel, with volumes ranging from 0.82 to 0.96 million barrels per day in the past 4 years (somewhat above 10% of global exports).
These restrictions have been imposed by Russia since past July to safeguard domestic supply chains after strikes from Ukraine on refineries, have shut down part of the production. In that context, the effect of that deal on global supply will also depend on Russia being able to restore its production.
In addition, Mr. Trump also announced an agreement between Russia and Ukraine for a ceasefire of attacks on energy infrastructure. Nevertheless, President Zelenskyy noted that he is unaware of such an agreement, albeit noting that if Russia agrees on such a ceasefire, Ukraine will follow.
On the other hand, strikes against tankers attempting to pass the Strait of Hormuz or/and the Gulf of Oman appear to have intensified recently. The escalating clashes between Saudi Arabia and the Houthis, also represent risks to the energy infrastructure in the region.
The International Energy Agency encouraged the G7 countries to assess whether additional (to the ones decided on October 2nd) diesel releases could take place. In all, reference diesel prices remain at c. double their levels prior to the war in Iran, without a significant improvement.
A prolonged stalemate in the Middle East will increase downside economic and financial risks. According to the IMF baseline projections (World Economic Outlook, October 2026), the reopening of the Strait of Hormuz is assumed to resume in March 2027, with 2026 expected global real GDP growth broadly unchanged compared with three months ago at +3.1% from +3.5% in 2025.
Global equity markets were slightly up (MSCI ACWI: +0.6% wow). The S&P500 increased by +1.2% wow, with volatility in stock prices closely related to the Artificial Intelligence investment theme remaining high. The euro area equity market underperformed.
Government bond yields moved in tandem with international energy commodities. US Treasury 10-year yields ranged from 5.22% to a 22-year high of 5.36% (see “Quote of the Week”).
US federal fiscal data for September (the month which marks the end of the fiscal year), due on October 13th, will also be closely watched given a disconcerting path for federal finances. According to preliminary estimates from the Congressional Budget Office (CBO), the federal budget deficit came out at $2.0 trillion in fiscal year 2026 (at c. -6.2% of GDP according to our estimates), $218 billion above the one in fiscal year 2025 (-5.8% of GDP).
Finally, investors will closely monitor September’s US CPI inflation, due on October 14th. The Federal Reserve Bank of Cleveland’s Inflation Nowcasting model, points to an acceleration in the annual growth of the headline CPI to +3.6% (+0.5% mom) from +3.4% in August, mainly due to higher energy prices (the core is envisaged stable at +2.4% yoy, with a “norm-like” +0.2% mom).