Energy inflation is no longer just a crude oil story. Crude oil prices have been volatile and elevated since the onset of the Middle East conflict, raising concerns that higher oil prices could keep inflation elevated for longer. But recent moves in energy markets suggest the inflation risk extends beyond crude oil.

Resilient economic growth, sticky inflation driven by higher energy prices and continued geopolitical uncertainty are complicating the path back to central-bank price targets. We believe policymakers are likely to adopt a tightening bias but remain data dependent.

Supply shocks may no longer be a temporary disruption. As they become more frequent and entrenched, the risk of second-round effects, where higher costs spill over into broader inflation, is rising. Central banks may need to respond differently.

Systematic, cost-aware tail-risk hedging may support portfolio downside protection while preserving strategic flexibility in volatile markets.