Page 18 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

international payments and shortages of relevant skills continue to constrain participation, particularly
among developing economies. Artificial intelligence could further accelerate the transformation of trade,
but differences in access to computing capacity, data, finance and technical expertise could widen existing
disparities.

Global trade rules are also adapting to this changing structure. Digital trade provisions are becoming
increasingly common in preferential trade agreements, with 55% of agreements concluded between 2000
and 2025 containing e-commerce or digital trade provisions. Since 2020, such provisions have been
incorporated into agreements involving 90% of developed countries, 62% of developing countries and
66% of LDCs. The increasing fragmentation of digital trade rules, however, could create additional
compliance challenges and make international regulatory cooperation more important.

At the same time, supply-chain resilience remains an important consideration for global trade.
Geopolitical tensions, changing trade policies and disruptions to transportation and energy flows are
encouraging businesses to reassess sourcing and production arrangements. UNCTAD has noted that
smaller firms are particularly vulnerable to increases in energy, transport, insurance and financing costs
arising from disruptions such as those affecting the Strait of Hormuz, with potential implications for their
participation in global value chains.

Global trade is increasingly being shaped by services, digitalisation and technology alongside traditional
merchandise trade. While this transformation creates opportunities for greater productivity,
diversification and participation in global value chains, differences in digital infrastructure, skills and
regulatory capacity mean that the benefits remain unevenly distributed. Strengthening digital capabilities,
improving services-trade data and facilitating greater participation in international digital trade rule-
making will therefore remain important for building more inclusive and resilient global trade.

2. Rising Oil Prices and Bond Yields Add to Global Financial Market Pressures

The escalation of the Middle East conflict has intensified pressure on global financial markets, with
renewed increases in oil prices accompanied by a sharp sell-off in government bonds. According to
the Financial Times, fading expectations of an early US-Iran agreement contributed to a rise in Brent crude
prices to US$108.83 per barrel on September 28, before prices moderated to close at US$105.28. The
renewed increase in oil prices has reinforced concerns that the energy shock could prolong inflationary
pressures and keep interest rates higher for longer.

The increase in energy prices has been closely associated with a rise in US Treasury yields. The yield on
the 10-year US Treasury bond climbed to 5.27%, its highest level since June 2007, while the two-year
Treasury yield reached 4.96%, a 28-month high. The 10-year yield has increased for five consecutive
sessions and has risen by more than 0.5 percentage point since mid-August. The move reflects changing
expectations regarding the inflation and interest-rate outlook, as investors reassess the extent to which
higher energy prices could feed into broader price pressures.

The bond-market adjustment has not been confined to the United States. UK 10-year gilt yields rose
to 5.44%, their highest level since 2007, while French and Italian 10-year borrowing costs also reached

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