Page 67 - CMA Journal (Mar-Apr 2026)

F O CU S A R T ICL E

Palm oil prices increased from 1,004 USD in January 2026 to increases in the series. This abrupt escalation coincided with global commodity dynamics, reinforcing in ationary Asian LNG Price Responses (2025–2026): A Pakistan - Pakistan experienced severe stress due to heavy
1,121 USD by March, indicating the transmission of energy major geopolitical disruptions that constrained global oil pressures, weakening growth prospects, and intensifying reliance on spot LNG markets and limited scal space. The
Similarly, the Geopolitical Risk Index demonstrated market volatility into agricultural and food commodities. supply, including signi cant interruptions in key export the broader environment of structural global economic Comparative Case Study March 2026 price spike strained import capacity, leading to
repeated spikes throughout 2025, rising from 113.23 in Given palm oil’s dual role as a food input and biofuel routes and production hubs and production networks. uncertainty. Japan - Japan, one of the world’s largest LNG importers, emergency LNG tenders, industrial gas rationing, and
January to 173.91 in March, surging dramatically to 222.38 feedstock, its pricing increasingly re ected developments faced acute supply security risks due to geopolitical temporary fuel switching to furnace oil and coal. The
in June, and remaining structurally elevated throughout the in energy markets, reinforcing cross commodity spillovers. A similar structural transition is observed in the Metal Price Insights about Asia LNG Price Trends disruptions in maritime corridors such as the Strait of country also expanded solar and net metering capacity as a
year. These movements highlight the intensi cation of Index, which showed a steady upward trajectory (2025–2026) Hormuz. In response, it strengthened strategic LNG short-term hedge while seeking longer term contracts and
geopolitical tensions, military con icts, sanctions risks, and The divergence between Brent and WTI highlights growing throughout 2025, rising from 181.19 in January to 210.77 in stockpiles, expanded long term procurement contracts, and concessional nancing.
strategic competition, particularly in energy-producing segmentation in global energy markets. Brent recorded December, driven by sustained industrial demand and The observed dynamics in Asia LNG prices during improved coordination among utilities for cargo swapping Bangladesh - Bangladesh faced similar pressure due to
regions and critical maritime corridors. stronger gains due to higher exposure to maritime risk, Gulf tightening supply conditions. In 2026, the index remained 2025–2026 can be directly explained through a and emergency reallocation, maintaining stability in power spot market dependence and scal constraints. The price
generation despite global price shocks.
supply disruptions, and transport related risk premiums, elevated, increasing further to 224.18 in January, peaking at combination of structural oversupply conditions and spike triggered emergency procurement, industrial
while WTI remained comparatively supported by US price stabilization in 2025 was abruptly replaced by a 222.85 in March after sustained high levels in February abrupt geopolitical disruptions in global energy markets. South Korea - South Korea adopted a resilience-oriented rationing, and greater reliance on alternative fuels to
domestic production and storage capacity. This divergence broad-based shock in early 2026, driven primarily by (220). Unlike energy markets, metals did not experience a The global LNG market entered 2026 with a signi cant approach based on diversi ed supplier contracts, state maintain power stability, alongside a gradual shift toward
contract-based LNG sourcing.
underscores the increasing importance of geography, escalating geopolitical tensions, particularly in energy sharp spike but rather a persistently high plateau, re ecting supply expansion, as approximately 93–150 mtpa of new coordinated procurement, and higher storage utilization. It
also accelerated investment in nuclear and renewable
logistics, and geopolitical exposure in price formation. producing regions and strategic maritime corridors such as ongoing pressures from industrial restructuring, supply liquefaction capacity came online across major exporting Sri Lanka - Sri Lanka, constrained by external imbalances,
the Strait of Hormuz. energy to reduce structural dependence on LNG imports. reduced LNG exposure by prioritizing fuel oil and
Overall, the simultaneous increase in commodity prices chain constraints, and increased demand from technology regions, including the United States, Qatar, Australia, and China - China, despite being the largest LNG importer, hydropower, while delaying further development of
However, despite this apparent stabilization in commodity alongside elevated levels of the Oil Price Uncertainty Index, In line with the World Bank Group’s Commodity Markets intensive sectors such as electric vehicles, data centers, and Nigeria. remained relatively resilient due to its diversi ed energy gas-based infrastructure.
prices, major global uncertainty indicators pointed to World Policy Uncertainty Index, and Geopolitical Risk Index Outlook, the global economy entered 2026 under severe renewable energy infrastructure. This expansion, representing roughly 10 percent growth in mix, including coal, domestic gas, and pipeline imports. In Regional Impact
deepening systemic vulnerabilities. The Oil Price indicates a more unstable and interconnected global risk commodity stress, with energy prices projected to rise by These developments are strongly reinforced by global price global LNG supply, shifted the market fundamentally from a 2025 it opportunistically increased spot LNG purchases
Uncertainty Index rose sharply from 40.8 in January 2025 to environment. Commodity pricing is increasingly in uenced around 24%, reaching their highest level since 2022, while dynamics in energy and agriculture linked commodities. seller dominated structure to a buyer driven regime, where during price declines, while in 2026 it emphasized contract The 2026 LNG shock functioned as a regional stress test of
90.2 in March, then surged to 186.7 in June, and reached not only by traditional supply and demand factors but also overall commodity prices are expected to increase by 16%, The World Bank highlights that energy markets have prices were expected to soften due to excess availability. At diversi cation, storage expansion, and demand side energy security frameworks in Asia, revealing sharp
208 by December, indicating persistent instability in by geopolitical developments, strategic chokepoints, policy driven by energy, fertilizer, and metal markets. This re ects a experienced one of the largest supply shocks on record due the same time, global LNG demand growth, estimated at exibility through industrial load adjustments. divergence in resilience. Advanced economies relied on
hedging, storage, and supply diversi cation, while
market expectations despite temporary price moderation. Source: Economic Policy Uncertainty fragmentation, and nancial uncertainty. This re ects a systemic transmission of geopolitical shocks into global to geopolitical disruptions, with crude oil supply reductions around 8.5 percent in 2026, remained concentrated in India - India faced rising import costs and responded by developing economies depended on demand compression,
Together, the simultaneous elevation of OPU, WPUI, and structural shift toward a more volatile and unpredictable pricing systems rather than isolated market movements. reaching up to 10 million barrels per day at peak stress emerging Asian economies but was insu cient to fully diversifying LNG sourcing toward the United States, Qatar, fuel substitution, and emergency procurement. This
GPR throughout 2025 indicates that while commodity global economic setting. The Global Energy Price Index illustrates this transition levels. Brent crude prices, which had averaged around USD absorb the supply surge, while Europe’s imports stabilized and Australia. At the same time, it accelerated renewable highlights how geopolitical risk ampli es existing structural
prices appeared to stabilize temporarily, the structural clearly. After declining from 188.6 in January 2025 to 154.2 69 per barrel in 2025, surged to an expected average of USD and China’s recovery remained gradual and uneven. These energy expansion and maintained coal-based backup inequalities in energy security and nancial capacity across
underpinnings of global markets were increasingly Global Commodity Shock & Energy-Metal in May 2025, and further easing to 147.4 by December 2025, 86 per barrel in 2026, with temporary spikes signi cantly conditions explain the relatively range bound and declining generation to reduce exposure to price volatility. the region.
destabilized by uncertainty, policy fragmentation, and Stress (2025–2026) energy markets initially re ected post crisis stabilization, higher during acute disruption phases. price pattern observed through most of 2025 and early
geopolitical stress. moderating demand, and relatively balanced supply 2026. Asian LNG Price Volatility Responses (2025–2026): Strategies & Lessons for Pakistan
Global commodity markets during 2025–2026 re ect a clear The spillover e ects extend beyond energy into fertilizers,
This fragility became more visible in early 2026, when the transition from cyclical normalization to geopolitically conditions. However, this trend reversed sharply in 2026, food security, and industrial inputs. Fertilizer prices are However, this structurally bearish outlook was disrupted by Country Crisis Challenges Strategic Actions Lessons for Pakistan
global economy entered a period of heightened volatility in driven structural instability. This shift is evident across with the index surging from 153.7 in January to 242.3 in projected to rise by 31% in 2026, while base metals and acute geopolitical tensions a ecting key maritime energy Japan Heavy LNG dependence, Strategic reserves, long-term Expand strategic storage, strengthen long-term
commodity markets driven by geopolitical shocks. Brent energy, metals, and related input markets, where initial March 2026, marking one of the steepest quarterly precious metals are reaching historic highs, re ecting both routes, particularly chokepoints such as the Strait of maritime chokepoint risks, contracts, cargo swaps, supplier contracting, institutionalize emergency cargo-
crude surged from 64.6 USD in January 2026 to 99.4 USD by industrial demand and heightened demand for safe haven Hormuz, which handles a signi cant share of global LNG power security concerns diversi cation, coordinated utility sharing
March, while WTI increased from 59.9 to 91.4 USD over the assets. These price movements are further ampli ed by trade. These disruptions introduced shipping risk planning
same period. Simultaneously, the Oil Price Uncertainty strong transmission e ects across commodity classes, premiums, cargo diversions, and short-term supply South Korea LNG import vulnerability, Diversi ed sourcing, strategic Improve state-led procurement coordination,
Index rose sharply from 142.2 in January 2026 to 773.5 in where oil price shocks propagate into natural gas and bottlenecks, while LNG’s inherently low short run supply power generation exposure storage, state-led procurement diversify suppliers, accelerate renewable &
Source: Economic Policy Uncertainty March, the highest level in the observed series, re ecting fertilizer markets, intensifying in ationary pressures elasticity ampli ed the impact of these shocks. As a result, coordination, nuclear & renewable alternative baseload
The World Policy Uncertainty Index (GDP-weighted extreme instability in energy market expectations. globally. despite underlying oversupply conditions, the Asia LNG acceleration
average) also showed sustained escalation, rising from The World Policy Uncertainty Index, although lower than its The structural nature of this volatility is further evident in market experienced a sharp nonlinear price spike in March China Demand volatility, supply Contract diversi cation, domestic Increase regional pipeline integration, strengthen
25,719.7 in January 2025 to 77,304.6 by September before 2025 peak, remained signi cantly elevated at 39,788.0 in the interaction between energy and metal markets. While 2026, rising by 93.58 percent in a single month. This balancing, industrial energy gas expansion, pipeline imports, domestic alternatives, improve demand-side
remaining elevated at 56,140.2 in December. This persistent January 2026 and increased further to 49,754.0 by March, 2025 re ected divergence—energy prices declining while indicates that while structural oversupply was exerting security storage growth, exible exibility
rise re ected increasing uncertainty in global economic indicating sustained policy instability amid rising metal prices steadily increased—2026 marks a downward pressure on prices, the market had become procurement
governance, trade regulations, monetary policy geopolitical tensions. synchronized escalation phase, where both indices remain highly vulnerable to geopolitical shocks, which temporarily India Rising import costs, energy Diversi ed LNG imports, renewable Further diversify LNG sources, scale renewables,
coordination, and macroeconomic management. elevated under the in uence of geopolitical fragmentation overrode fundamentals and triggered extreme volatility security concerns, industrial expansion, coal backup, non-Middle strengthen coal & alternative backup planning
Similarly, the Geopolitical Risk Index rose from 167.80 in through panic buying, reallocation of cargoes to higher
January 2026 to 297.27 by March, marking one of the most and supply chain disruptions. This convergence highlights a paying markets, and supply chain disruptions. demand growth East supplier engagement
pronounced increases in the dataset. This increase re ects critical structural shift: commodity markets are no longer Bangladesh Fiscal constraints, spot Emergency tenders, fuel switching, Reduce spot reliance, improve procurement
intensifying geopolitical con ict, disruptions in key independently driven by supply and demand fundamentals market exposure, power demand rationing, long-term planning, strengthen concessional long-term
maritime supply routes such as the Strait of Hormuz, and but are increasingly shaped by interconnected geopolitical shortages contract pursuit agreements
growing concerns over prolonged regional instability, all of and nancial risk factors. Sri Lanka External balance weakness, Fuel oil substitution, hydropower Improve domestic diversi cation, strengthen
which increasingly in uenced market behavior. Overall, the evidence con rms that global energy and metal high import dependence prioritization, delayed LNG hydro/renewables, avoid overdependence on
infrastructure expansion
imported LNG
The combined rise in oil price uncertainty, policy markets have entered a high volatility regime characterized Vietnam / Growing LNG dependence, Regasi cation investments, long- Expand LNG infrastructure resilience, improve
uncertainty, and geopolitical risk suggests that the 2026 by persistent external shocks, elevated price levels, and Taiwan infrastructure expansion term infrastructure planning, storage & regasi cation capacity
commodity shock extended beyond physical supply reduced predictability. The transition from stabilization in needs diversi ed energy imports
constraints and was also shaped by broader systemic 2025 to synchronized escalation in 2026 underscores that Pakistan LNG import disruptions, Emergency spot procurement, Institutionalize strategic reserves, strengthen
uncertainty linked to geopolitical fragmentation and policy geopolitical risk has become the dominant force shaping Source: Macrotrends
Source: World Uncertainty Index scal stress, power supplier diversi cation, fuel diversi ed long-term contracts, expand domestic
unpredictability. shortages, overreliance on substitution, solar expansion, renewables, improve digital subsidy targeting,
Qatar targeted subsidies, austerity deepen energy diplomacy

ICMA’s Chartered Management Accountant, Mar-Apr 2026 65