HSBC Holdings Chair Brendan Nelson has asserted that a Middle East peace deal is essential for a substantial resumption of global energy flows, with oil-driven inflation looming as a major risk to the world economy. Speaking at the HSBC Global Investment Summit in Hong Kong, Mr Nelson warned that persistent uncertainty would keep energy prices elevated. HSBC Holdings is a global banking and financial services organisation, providing a wide range of services to customers worldwide, including retail banking, wealth management, commercial banking, and global private banking.
Oil prices have surged since the Iran war began, remaining near US$100 a barrel as investors brace for prolonged tensions around the crucial Strait of Hormuz, through which a fifth of global oil and gas typically passes. The US Navy initiated a blockade of the strait on Monday, following the breakdown of weekend talks to end the six-week conflict. ANZ analysts estimate that approximately 10 million barrels per day of crude supply have been effectively removed from the market, with a prolonged US blockade potentially curbing an additional 3 million to 4 million barrels per day.
Mr Nelson cautioned that current global growth, trade, and inflation projections should be approached with considerable caution, given that the full impacts of the Iran conflict are yet to be understood. He stated that continued disruption from higher energy costs would lift inflation and depress growth. With a swift reopening of the strait appearing unlikely, Mr Nelson expects interest rates to be held steady in the US, Europe, and Britain this year, as rising short and long-term market rates have already tightened financial conditions. Christopher Sheldon, global co-head of credit and markets at KKR & Co., further noted the difficult investment environment facing investors due to geopolitical tensions, tariff concerns, and private credit volatility, characterised by increasing defaults and downgrades. Richard Oldfield, CEO of Schroders, also raised concerns about a potential “misallocation of capital” in the booming data centre market.
