Brent’s surge above US$100 signals a structural shift in how geopolitics, inflation and financial markets interact.
Oil markets are increasingly shaped by geopolitics and strategic chokepoints, with tensions around the Strait of Hormuz amplifying global energy risk premiums.
KEY TAKEAWAYS
Oil is now driving the global macro cycle. Brent crude near US$104 per barrel, up almost 50% this year, is reshaping inflation, monetary policy and global financial markets.
Geopolitics has embedded a permanent risk premium in energy markets. Around 20% of global oil flows pass through the Strait of Hormuz, making even marginal disruptions systemically significant.
Over the next 12 months, Brent crude could trade between US$95 and US$130 per barrel, according to Juwai IQI Chief Global Economist Shan Saeed.
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, March 30 – For decades, oil was something the global economy had to manage. Today, it is managing the global economy.
That is the central argument of Shan Saeed, Chief Global Economist at Juwai IQI, who in an exclusive interview with TNS News explained why the energy market shock of 2026 represents something fundamentally different from previous oil price cycles — and why policymakers, investors and businesses that treat it as temporary turbulence may be misreading the moment.
Brent crude is trading near US$104 per barrel, up roughly 47–50% year-to-date following geopolitical tensions involving Iran. With around 20% of global oil flows moving through the Strait of Hormuz, even marginal disruptions now carry systemic implications for inflation, trade flows and financial stability.
“This is not a spike,” Shan told TNS News. “This is a structural repricing.”
A Permanent Risk Premium
At the heart of Shan’s analysis is a structural shift in how energy markets price geopolitical risk.
Heightened tensions across the Middle East and the vulnerability of critical chokepoints have transformed oil from a conventional commodity into a strategic asset class — one characterised by asymmetric upside risk and limited short-term supply elasticity.
The practical consequence is that the geopolitical risk premium once treated as a temporary overlay has now become embedded in oil markets.
Markets can no longer assume that tensions will de-escalate quickly enough to contain price pressures.
That embedded premium is already feeding into monetary policy.
Elevated oil prices are reinforcing inflation persistence, constraining central banks’ ability to pivot toward easing. The US Federal Reserve remains in a higher-for-longer regime, with elevated real yields tightening global financial conditions.
“Higher oil feeds entrenched inflation, which forces restrictive policy, which tightens liquidity, which triggers cross-asset repricing. Every link in that chain is now active,” Shan said.
He described the transmission mechanism as mechanical and sequential — with no meaningful circuit breaker unless oil prices retreat materially.
For economies already carrying heavy debt loads — global debt now exceeds US$315 trillion, roughly 330% of world GDP — prolonged restrictive monetary policy compounds an already fragile financial environment.
The Transition Paradox
One of the more counterintuitive elements of Shan’s outlook concerns the global energy transition.
Despite record global investment in renewable energy — exceeding US$1.7 trillion annually — he argues that decarbonisation has not diminished oil’s macroeconomic influence in the near term.
The reason lies in structural demand dynamics.
Oil consumption continues to rise, driven largely by Asia’s fast-growing economies, particularly India and ASEAN nations, which account for the majority of incremental global demand growth.
The energy transition, in Shan’s framing, is therefore not replacing oil. It is coexisting with it.
“Anyone who tells you the energy transition has broken oil’s grip on the macro cycle is not reading the demand data,” he said.
Even as the world accelerates toward net-zero commitments, oil remains central to inflation modelling, fiscal planning and investment strategy across the Asia-Pacific region.
Rising oil prices transmit through inflation, monetary policy and financial markets, reshaping the global macro cycle.
The 12-Month Outlook
Shan expects Brent crude to trade between US$95 and US$130 per barrel over the next 12 months.
The floor, he argues, is structurally supported by three converging forces:
disciplined supply management by OPEC+
resilient demand growth led by Asia
chronic underinvestment in upstream capacity
Years of reduced capital expenditure have left global supply less responsive even when prices rise sharply.
The ceiling, however, is determined almost entirely by geopolitics.
Any escalation affecting the Strait of Hormuz or broader Middle East supply corridors could push prices rapidly toward the upper end of that range — or beyond it.
“Upside risks remain firmly skewed to geopolitics. Markets are not pricing this correctly,” Shan said.
The asymmetry is itself a signal.
In normal commodity cycles, supply and demand dynamics bound prices on both sides. In the current environment, one side of that equation has been replaced by the unpredictable logic of conflict.
Implications for Malaysia
For Malaysia, the impact is complex.
As an energy exporter, the country benefits from stronger revenues at Petroliam Nasional Bhd (Petronas) and improved fiscal inflows.
But higher oil prices also transmit inflation through fuel costs, transportation and food supply chains, increasing pressure on household purchasing power and raising the government’s subsidy burden.
Shan believes policymakers must now adjust to a new macro environment.
“Oil isn’t just shaping the cycle. It’s dictating how economies navigate inflation, liquidity and global capital flows. The time to position is now.”
The energy market of 2026, he argues, has crossed a threshold.
The question is no longer whether oil will remain elevated.
The question is whether governments, investors and institutions dependent on stable energy prices have updated their assumptions accordingly.
Many, Shan suggests, have not.
The 2026 energy shock is reshaping global macro dynamics as geopolitics increasingly drives energy markets and financial conditions.
Shan Saeed is Chief Global Economist at Juwai IQI. He spoke exclusively to TNS News as part of the publication’s 2026 Energy Market Outlook series.
– TNS News / tnsnews.com.my