Market Speaks: German central bank highlights upside risk in Crude oil prices

German Central Bank stated in a monthly report today that the global economy remained resilient in the second quarter of 2026. In the United States, the overall economic upturn continued in the second quarter, more or less maintaining its previous pace. Growth strengthened in the euro area after being dampened in the first quarter by the sharp decline in Irish GDP. Excluding Ireland, economic output rose moderately again in the euro area. In China, GDP growth slowed markedly in the second quarter, but given the ongoing export boom the underlying economic dynamics are likely to have performed better. Overall, the global economy has thus far held up quite well despite the burdens arising from higher energy prices and ongoing trade and geopolitical tensions. It cautioned that energy commodity prices have remained significantly elevated recently, given the volatile geopolitical situation. Oil prices fell sharply in June after the United States and Iran agreed on a memorandum of understanding and shipping via the Strait of Hormuz resumed temporarily. In July, however, prices picked up again as a result of new military strikes and the renewed blockade of the Strait. Forward quotations suggest that oil prices will fall slightly by the end of the year. However, the upside risks remain considerable given reduced global inventories and possible further supply outages in the event of a regional expansion of the conflict.

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