[Major Bank View] UBS Shao Zhiming: Crude Oil Futures Continuing to Rise, U.S. Inflation Has Upside Potential Over Next 12-18 Months

SocialAnxietyStaker · 2026-03-16T06:46:23+00:00

Iran's situation remains tense, with the Foreign Ministry welcoming peace proposals, but the U.S. unwilling to negotiate, leading to crude oil supply shortages and Brent crude prices breaking through $100 per barrel. Rising oil prices are expected to impact U.S. inflation through mid-next year. The Federal Reserve meeting is about to announce its interest rate decision, with markets expecting rates to remain unchanged while focusing on economic forecasts. Hong Kong stocks have shown strong resilience recently due to capital allocation effects and the entry of the "national team."

SocialAnxietyStaker

2026-03-16 06:46:23

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There are no signs of easing in the Iran situation. The Iranian Foreign Minister stated that they welcome discussions to end the war, but the U.S. is unwilling to negotiate. Meanwhile, transportation through the Strait of Hormuz remains blocked, causing a shortage of oil supplies and pushing Brent crude futures above $100 per barrel. Swiss asset manager Lombard Odier’s Asia head, Shao Zhiming, expects that the current surge in oil prices could lead to ongoing inflation in the U.S. until mid-next year.

He pointed out that after oil prices reached current levels, the market’s focus has shifted to how long high oil prices will last, their impact on global inflation, and how central banks will respond.

Currently, the futures prices for Brent crude in September this year, March next year, and September next year are $87, $77, and $74 per barrel, respectively, all significantly higher than a month ago. This suggests that, under basic scenarios, oil prices may not fall back to $75 until mid-next year, a level with limited economic impact. It is expected that the U.S. CPI has room to rise over the next 12 to 18 months, which will limit the Federal Reserve’s rate cuts.

Additionally, the U.S. Federal Reserve will announce its interest rate decision on Thursday (the 18th) early morning, with market expectations that rates will remain unchanged. Attention will also be on the post-meeting dot plot and economic forecasts.

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He believes that Fed Chair Jerome Powell may express uncertainty about the impact of oil prices on U.S. inflation expectations during the post-meeting press conference.

However, there is no need for the U.S. to cut rates now to support the economy. Additionally, the current 2-year Treasury yield at 3.73% reflects market expectations that future interest rates will remain similar to current levels.

He thinks that Hong Kong stocks have recently shown strong resilience mainly because emerging market funds are heavily invested in Taiwan and South Korea. When reducing holdings, they first sell off in these markets. Moreover, the “national team” has also stepped into the market, helping the stock market maintain a slow bull trend.

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