S&P Global forecasts oil above $100 to drive tighter central bank policy

September 18, 2026 at 11:49 AM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

S&P Global Market Intelligence economist Ken Wattret released the September 2026 Global Economic Forecast on September 16, projecting renewed energy price pressure, tighter monetary policy, and resilient global growth. The report notes Brent crude spot prices have returned above $100 per barrel, with US diesel exceeding $6 per gallon for the first time. European gas prices rose more than 30% since late July to over €80 per megawatt-hour, the highest since late 2022.

Key Facts

Brent crude spot prices returned above $100 per barrel, with the first half of September averaging more than 40% higher than early July levels.
US diesel prices exceeded $6 per gallon for the first time in history amid a persistent refining capacity shortage.
European gas prices rose more than 30% since late July to over €80 per megawatt-hour, the highest since late 2022.
The European Central Bank raised its key rate by 25 basis points in early September, and the US Federal Reserve followed a similar path.
The Bank of Japan is forecast to continue faster policy normalization with its next step in December.

Energy Price Surge

S&P Global Energy's base case scenario, called 'contested recovery', had projected Brent crude at $89 per barrel by end-2026 and $86 by end-2027. Spot prices have instead returned above $100 per barrel, with the first half of September averaging more than 40% higher than early July levels when the US-Iran memorandum was in effect. US diesel prices exceeded $6 per gallon for the first time in history amid a persistent refining capacity shortage. European gas prices rose more than 30% since late July to over €80 per megawatt-hour, the highest since late 2022 but still well below the peak of the early months of the Russia-Ukraine conflict.

Central Bank Tightening

The European Central Bank raised its key rate by 25 basis points in early September, and the US Federal Reserve followed a similar path. S&P analysts consider the nearly 75 basis points of further tightening priced in by markets for the eurozone by early 2027 to be excessive, though the regulator's hawkish rhetoric may persist longer than the hikes themselves. For the Fed, the base case remains a single hike without a series, though this assessment depends heavily on the trajectory of inflation and labor market data. The Bank of Japan is forecast to continue faster policy normalization with its next step in December.

Bond Yield Pressures

The yield on 10-year US Treasury bonds is holding around 5%, up about 100 basis points from levels before the Iran-US conflict began. In Britain and France, the two European economies with the most strained budgets, the rise in yields has been even more pronounced.