Ahead Today
G3: US CPI
Asia: -
Market Highlights
Crude oil prices have swung sharply over recent sessions, retreating from a peak near USD120/bbl to around USD90/bbl. While prices remain relatively elevated and risks are still skewed to the upside, markets are beginning to reassess the probability of a prolonged supply shock. US President Trump has signalled that the conflict with Iran may end sooner than previously expected, potentially lasting less than the 4-5 weeks initially anticipated. While volatility remains elevated in oil prices, market pricing suggests reduced probability of a prolonged oil supply shock for now.
Potential coordinated policy response may also help partially offset upside risk to oil prices. G7 countries will discuss about a potential coordinated release of strategic petroleum reserves to help stabilize oil prices. At the same time, Saudi Arabia will reportedly reroute oil shipments via the Red Sea, with flows expected to reach full capacity in the coming days. Although this cannot fully substitute for volumes that typically pass through the Strait of Hormuz, it nonetheless provides supply relief at the margin.
That said, risks remain firmly elevated. The situation on the ground remains fluid, with Iran continuing to threaten vessels attempting to transit Hormuz, which is effectively closed. Fuel storage across several Gulf producers is nearing capacity as crude cannot be shipped out via Hormuz, contributing to reported production cuts. Saudi Arabia, the UAE, Iraq, and Kuwait have collectively reduced output by as much as 6.7mb/d, equivalent to roughly one‑fifth of the region’s normal 30–32mb/d production.
Regional FX
The moderation in oil prices from highs near $120/bbl has triggered a broad relief rally, with currencies most battered during the initial spike now leading gains. The Thai baht and Philippine peso have outperformed.
For Thailand, vulnerabilities remain given its large net energy import position and relatively low oil inventories of around three months. However, the macro starting point is notably stronger than in 2022, with the current account back in surplus at around 3% of GDP in 2025, compared with a deficit of roughly 2% of GDP ahead of the Russia Ukraine war.
The Malaysian ringgit has also rebounded alongside improved global risk sentiment while benefiting structurally from Malaysia’s status as a net energy exporter. Higher energy prices continue to provide a natural buffer to the external balance, helping to differentiate MYR from regional peers during periods of energy driven volatility.
China-related data have added a constructive undertone to regional markets. January–February exports rose by 21.8%yoy in USD terms, signalling resilient global demand and offering evidence that China’s export diversification strategy is gaining traction. This has helped to support broader Asia risk sentiment even as geopolitical uncertainty remains elevated.
In Indonesia, authorities appear to draw a clear line for USDIDR at 17,000, with FX intervention reinforcing this level as a policy red line. Indonesia is relatively less exposed to oil price shocks compared with many regional peers, but the rupiah remains sensitive to swings in global and regional risk sentiment. Our base case remains for USDIDR to be contained below 17,000, though tail risks would rise materially if the Iran conflict were to drag on and re-ignite upward pressure on energy prices.
India has emerged as a relative near term beneficiary from a policy perspective. A 30-day waiver from the US allowing temporary purchases of Russian oil provides an important relief valve, cushioning near term energy and inflation risks. Indian refiners have reportedly already secured around 30 million barrels of Russian crude under this waiver.