HSBC warns on energy flows

Brendan Nelson, the chair of HSBC, said on April 14 that a Middle East peace deal is needed before global energy flows can recover in a meaningful way. (reuters.com) Nelson made the remarks at the HSBC Global Investment Summit in Hong Kong, where he said oil-driven inflation is now a major risk to the world economy and warned that energy prices will stay high while uncertainty lasts. (reuters.com) (info.gov.hk) His warning landed as oil markets were already pricing in a severe supply shock. ANZ said about 10 million barrels a day of crude supply have been effectively removed from the market, and a prolonged United States blockade could curb another 3 million to 4 million barrels a day. (reuters.com) The International Monetary Fund said on April 14 that the war in the Middle East is testing the world economy through higher commodity prices, firmer inflation expectations and tighter financial conditions. It now projects global growth of 3.1% in 2026 and 3.2% in 2027 under a limited-conflict scenario. (imf.org) The basic mechanism is simple: when less oil and gas can move from producers to buyers, fuel gets more expensive, transport and factory costs rise, and central banks have a harder time bringing inflation down. The International Monetary Fund said headline inflation is expected to rise modestly in 2026 before resuming its decline in 2027. (imf.org) Fresh data from the International Energy Agency show how quickly the shock has spread. In its April 2026 Oil Market Report, the agency said global oil demand is now expected to contract by 80,000 barrels a day this year, a reversal from the growth it expected a month earlier. (iea.org) That would be the first annual drop in oil demand since the 2020 pandemic, according to the agency, with the steepest cuts so far concentrated in the Middle East and Asia Pacific. The International Energy Agency said second-quarter demand could fall by 1.5 million barrels a day, the sharpest drop since Covid-era shutdowns. (iea.org) The warning also cuts against the broader prewar view that commodity prices would ease in 2026. The World Bank said on April 2 that its energy price index had surged 41.6% in March, led by a 40.5% jump in crude oil, even as its October outlook had projected falling commodity prices this year. (worldbank.org) Nelson’s point was narrower than a market call: banks, manufacturers and consumers do not need a brief price dip if shipping lanes and production stay disrupted. They need a political settlement that lets energy move normally again. (reuters.com)