Page 16 - FIPI - Policy & Economic Report May 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Figure 9: Global manufacturing output

Source: S&P Global Market Intelligence

Global Financial Market Conditions

Global financial market conditions remained volatile in May 2026 amid persistent inflationary pressures
and uncertainty surrounding monetary policy trajectories. Sovereign bond yields increased across several
advanced economies as markets adjusted to expectations of prolonged inflation and delayed monetary
easing.

Financial markets have remained relatively resilient despite weakening macroeconomic conditions.
However, elevated borrowing costs and tighter liquidity conditions continue to weigh on investment
sentiment and financing activity globally.

S&P Global also warned that sustained inflation and elevated energy prices could increase fiscal pressures
for several economies, particularly those with high debt levels and significant energy import dependence.
The report noted growing concerns regarding stagflationary risks, where slowing economic growth
coincides with persistent inflationary conditions. Central banks globally are expected to remain cautious
in adjusting monetary policy settings until inflationary pressures show sustained moderation.

Global Energy and Commodity Markets

Global energy and commodity markets remained under pressure in May 2026 due to elevated geopolitical
risks, supply disruptions, and tightening supply conditions. Brent crude oil prices are projected to remain
above US$100 per barrel through the remainder of 2026, contributing significantly to global inflationary
pressures and higher industrial input costs.

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