Caption: A picture taken at sunset on March 12, 2026 shows a general view of the Bizkaia Bay Gas (BBG) regasification plant in the Spanish Basque city of Zierbena
Summary
- Oil Prices: Oil prices surged over the past week, driven by geopolitical tensions and supply risks. Brent crude has reached elevated levels, reintroducing a significant risk premium into global markets.
- Natural Gas: Prices remained relatively stable this week. However, underlying fundamentals point to structural tightness due to strong Liquefied Natural Gas (LNG) demand and constrained global supply.
- Fiscal Improvement: Trinidad and Tobago’s fiscal outlook is improving. Higher oil prices are expected to boost government revenues and narrow the fiscal deficit relative to initial budget assumptions.
- US Dollar Liquidity: US dollar liquidity is expected to increase modestly by US$300M – US$500M. This will provide some relief to the foreign exchange market, though structural tightness will persist due to ongoing gas production constraints.US equities experienced a decline amid ongoing market volatility.
- Local Markets: The local stock market saw selective gains, specifically in energy-linked and financial stocks, led by strong performances from TTNGL, NEL, and JMMB.
OVER the past five trading days, global financial markets have been primarily driven by developments in the energy sector, with crude oil prices rising sharply amid escalating geopolitical tensions and supply concerns. Brent crude oil closed last week at US$112.19 per barrel, while Natural Gas settled at US$3.10 MMBtu.
Trinidad and Tobago’s economy would benefit from the current energy price environment, as this supports a positive near-term fiscal outlook. Higher oil prices are expected to improve government revenues through increased royalties, taxes, and dividends, contributing to a narrowing of the fiscal deficit relative to budget projections.
In parallel, stronger export receipts are likely to generate a moderate increase in US dollar liquidity within the domestic financial system, with incremental inflows estimated in the range of US$300 million to US$500 million annually if current prices hold. This should provide some relief to the foreign exchange market and support Central Bank reserve buffers.
However, the improvement in foreign exchange liquidity is expected to be partial rather than structural, as ongoing natural gas production constraints continue to limit LNG export volumes, which remain the country’s main source of foreign exchange earnings. As a result, while market conditions may ease, structural tightness in the foreign exchange market is likely to persist, necessitating continued Central Bank intervention. Sustained improvement in macroeconomic stability will depend on a meaningful recovery in upstream gas production and increased investment across the energy sector.
Brent crude traded within the US$100 to US$112 per barrel range last week, reflecting a significant increase in the geopolitical risk premium, while natural gas prices remained relatively stable at approximately US$3.02 to US$3.10 per MMBtu. This divergence highlights a tightening oil market driven by supply-side risks, contrasted with a more balanced but structurally constrained natural gas market. The increase in oil prices has been largely attributed to heightened tensions in the Middle East and concerns over potential disruptions to key supply routes, particularly the Strait of Hormuz, alongside continued production discipline from OPEC+ and limited global spare capacity.
Natural gas markets, while stable in the short term, continue to reflect underlying structural tightness. Global LNG demand remains robust, particularly across Asia, while supply growth has been constrained by underinvestment and operational limitations.
Although European storage levels have provided temporary stability, medium-term risks remain tilted to the upside as global demand continues to outpace supply expansion. This dynamic is particularly relevant for LNG exporting economies such as Trinidad and Tobago, where production constraints limit the ability to fully capitalise on favourable pricing conditions.
US equity markets experienced modest declines over the review period, reflecting increased volatility as investors responded to rising oil prices, geopolitical risks, and shifting expectations for monetary policy. The S&P 500 declined by approximately 1.87%, while the Nasdaq Composite underperformed, falling 2.07% due to pressure on technology stocks. The Dow Jones Industrial Average fell the most, ending the week at -2.11%. Overall, market conditions suggest a period of short-term consolidation, with investors rotating toward energy and defensive sectors amid heightened macroeconomic uncertainty.
Globally, rising energy prices are expected to place increasing pressure on major energy-importing economies, including China, India, Japan, and South Korea. These economies are likely to experience higher inflation, widening current account deficits, and increased fiscal burdens associated with energy subsidies. In Europe, elevated energy costs may further constrain economic recovery, particularly in energy-intensive industries, reinforcing downside risks to growth and complicating monetary policy decisions.
Domestically, the Trinidad and Tobago stock market reflected the expected increase in domestic liquidity. Weekly advances were observed in TTNGL, NEL, and JMMB, with TTNGL increasing by over 24% for the trading week. Market activity continues to be characterized by moderate liquidity and limited catalysts, with performance concentrated in a small number of large-cap stocks. Overall, market performance remains narrow, reflecting cautious investor sentiment and the structural characteristics of the local market.
Overall, energy markets have re-emerged as a central driver of global macroeconomic conditions, with significant implications for inflation, fiscal balances, and investment strategy. While higher oil prices provide near-term fiscal support for Trinidad and Tobago, the broader outlook remains dependent on addressing structural constraints in natural gas production. The environment supports selective exposure to energy-linked assets; however, continued geopolitical uncertainty and supply-side risks are expected to sustain elevated market volatility in the near term.
Dave Dookie is the Managing Director of Waterloo Capital Advisors Limited, a Trinidad and Tobago based financial advisory firm specialising in investment management, capital markets and structured finance. He has advised governments, financial institutions, and energy companies on debt issuance, project financing, and strategic capital raising across the Caribbean. He holds degrees and advanced qualifications from the London School of Economics and Political Science (LSE) and the University of London and has completed advanced training in data science through the MIT Applied Data Science Programme.
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