Brent Above $93: Middle East Escalation Revives Inflation Shock

Oil Barrel Rebound Driven by Geopolitical Risk Premium

Brent crude has climbed back above $93 per barrel following Israel's order for its troops to advance further into southern Lebanon against Hezbollah, despite a ceasefire announced more than six weeks ago. The exchange of strikes between the United States and Iran continues, even though negotiations seem to be progressing, maintaining a risk premium on the flows passing through the Strait of Hormuz.

There are concerns about potential disruptions to oil and LNG shipments, as several tankers are slowing down or rerouting to limit their exposure.

Imported Inflation and Interest Rate Path: A Scenario to Recalibrate

Firm energy prices are mechanically weighing on importing economies, including the eurozone, complicating the understanding of the disinflation that has been underway for several quarters. This level of pricing could delay the decrease in global inflation and sustain pressure on long-term rates, even as recent data indicate a slowdown in demand in China and Europe.

This tension follows Neel Kashkari's warning about an « inflationary shock wave » linked to the conflict with Iran. Consequently, bond markets are recalibrating the soft landing scenario, with an increased risk of imported inflation for countries dependent on hydrocarbons.

Sectoral Dispersion in Equity Markets

In the stock markets, this context tends to amplify dispersal between sectors. Energy stocks benefit mechanically from strong oil prices, while energy-intensive sectors, transportation, or discretionary consumption remain exposed to margin compression if the rise in supply costs persists.

The global geopolitical tension isn't limited to the Middle East. The Ukrainian Air Force, cited by The Washington Post, reports 299 drones launched by Russia in the latest sequence, with 212 intercepted, affecting several civilian and energy facilities.

Adding to this is a health signal monitored by health authorities: according to the World Health Organization via MedicalXpress, the Ebola outbreak (Bundibugyo virus) in the Democratic Republic of Congo and Uganda has 134 confirmed cases, including 9 in Uganda, and 18 deaths as of May 29, 2026. These figures are rapidly evolving and do not indicate a surge but add to the list of exogenous factors that can impact economies more or less sustainably.