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Daily Economic Update
26.01.2026
Oil: Prices extend rally on Iran-linked geopolitical risk, Kazakhstan oil field shutdown. Brent futures closed Friday at $65.9/bbl, notching a fourth weekly gain (+2.7% w/w; +8.3% ytd) following US President Trump’s announcement that he was sending an “armada” towards Iran, and further boosted by production disruptions in Kazakhstan. On the geopolitical front, Trump ramped up pressure on the Iranian regime due to its brutal clampdown on local protesters and its nuclear program. The protests, however, appear to have subsided, while Iran has yet to report to the International Atomic Energy Agency on the status of its nuclear sites, a move that is unlikely to materialize soon given Tehran’s reluctance to reveal such sensitive information. Trump’s announcement was followed by US Treasury’s fresh sanctions on vessels and firms handling Iranian oil. Further boosting prices last week was news that Kazakhstan’s largest oil field, Tengiz, went offline following a fire on Monday, with reports indicating that it could remain shut until the end of January, dropping the country’s average production for the month to 1.1 mb/d from the usual 1.8 mb/d. The International Energy Agency’s (IEA) monthly report added further support to the market after the agency revised upward its oil demand growth forecast for this year from 860 kb/d to 930 kb/d (more details here). However, Trump’s announcement of a “framework” deal with NATO concerning Greenland and his cancellation of 10% additional tariffs on eight European countries, helped limit oil price gains.
Saudi Arabia: Robust non-oil exports lead to wider trade balance surplus in November. Strong non-oil exports (including re-exports) helped push the Saudi trade balance higher in November, which widened to SR 22.3 billion (+70% y/y) from SR 21.3 billion in October, according to preliminary official data. Total exports were up by 10% y/y, with non-oil exports increasing by 21%, registering growth for the 24th consecutive month, and oil exports rising by 5.4%, continuing their improvement since August. Non-oil export growth (by volume) was led by footwear/headwear items (33%), construction materials (34%) and food and beverage (25%). Imports declined in November for the first time in two years, albeit by a modest 0.2%. The slowdown in imports was in large part due to a drop (5.6%) in machinery and mechanical/electrical appliances. We expect to see a continued improvement in the trade balance over coming months, helped by the ongoing recovery in oil exports and sustained non-oil export growth.
Global: Possibility of naming a new Fed Chair, FOMC meeting, and attempts to avoid another US government shutdown key matters this week. In the US, there is a possibility that President Trump will announce his candidate for the next Fed Chair this week, knowing that the term of the temporarily-appointed governor Stephen Miran will end on Saturday, though the latter can continue in his duties until a new governor (and potential Fed Chair) is appointed. The FOMC will meet on Tuesday/Wednesday, and the market widely expects the Fed Fund rate to be left unchanged after a 25 bps cut in each of the previous three meetings. Fed Chair Powell’s post-meeting conference should get even additional attention given the recently-initiated criminal investigation involving him. Attention will also be on GOP-Democrats bickering in the Senate to pass additional funding bills for 2026, given that the current government funding agreement expires end of January; as we stand, a partial government shutdown is possible. In the Eurozone, flash GDP growth for Q4 is due on Friday and is seen steady at 0.3% q/q. In France specifically, attention will be on developments regarding the 2026 budget and on possible additional no-confidence votes. In the UK, following a steep 0.4% m/m fall in December, the Nationwide house price index for January is due on Friday. Finally in Japan, focus will remain on currency movements and government bond yields given the high volatility seen lately, especially in the context of the snap parliamentary elections scheduled for 8 February. In terms of data releases, December’s retail sales and industrial production are due on Friday, with retail sales growth seen weakening to 0.7% y/y (from 1% in November) while industrial production is seen falling by 0.4% m/m, following a steeper 2.7% drop in November.