Oil Prices Lower as Last October Week Kicks Off and Dollar Up Especially Against Brazilian Real
October 26, 2026
(116) Oil prices remain a key driver of economic life around the world. At $115.2 and $101.9 per barrel, Brent and West Texas Intermediate crude costs remain above the $100/barrel threshold, but they are 1.3% and 2.0% below pre-weekend closing levels amid reports of some back-channel diplomatic efforts and news of near-normal traffic through the Strait of Hormuz.
In the weekend’s elections — Brazil’s runoff presidential vote and Serbian parliamentary elections — far-right candidates lost. President Lula of Brazil had placed second in the first round vote and was not expected to win but held off challenger Flavio Bolsonaro and son of the now-imprisoned former president by a tight 51.8% to 48.2% margin. Bolsonaro, who had U.S. President Trump’s support, plans to contest the count in court. Political fragility and fiscal concerns have depressed the Brazilian real by around 10% against the dollar. In Serbia, a student-led opposition protest movement against the country’s former prime minister, Aleksandar Vucic and dominant politician for the past decade and a half, handily captured a majority of parliament’s 250 seats, prompting Vucic to concede fairly quickly. Along with the defeat of Hungary’s right-wing former leader Orban, this brings to three the list of notable rejections of foreign governments that were sympathetic to America’s MAGA brand of politics. Estimates of hardline MAGA support in the United States runs at about one in five but represents a mere three-quarters of one percent of the world population.
Thanks to the dip in oil prices, the dollar has opened the week with otherwise slight gains ranging from 0.1% against the euro to 0.4% relative to the yen and including 0.2% upticks against the Canadian dollar, sterling and Indian rupee. At $1.1178, the euro remains about 36% above its record low of $0.8228 that coincidentally was touched exactly 36 years ago on October 26, 2000.
Stock market behavior shifted from adverse in Asia’s day to positive now. While share prices closed down by 1.8% in Taiwan, 1.5% in South Korea and 0.8% in Japan, markets in Germany, Italy, France and the U.K. sport gains so far of 1.2%, 1.0%, 0.9% and 0.5%, and major U.S. equity barometers were 0.3-0.5% higher 45 minutes into America’s trading day.
In contrast to a two and three quarter percentage point leap in the Brazilian ten-year sovereign note to 15.5%, 10-year yields have dropped today by 11 basis points in France, 8 bps in Italy, 5 bps in the U.K. and Spain, 4 bps in Canada and 3 basis points in the United States. The 10-year Japanese government bond yield closed unchanged.
Spain, Sweden and Finland reported September producer price inflation figures that were much higher. At 19.3%, Spanish PPI inflation was at a 46-month high and up from 13.2% in August and -6.9% back in February. After 2025 at -2.7% in December, Swedish producer price inflation climbed to 6.8% by August and to a 44-month high of 11.2% last month. Finnish PPI inflation of 9.8% also represents a 44-month high, far distant from -0.8% last December.
The German business climate index compiled by the IFO Institute in Munich printed marginally above expectations at a 41-month high of 90.2 in October versus this year’s low of 84.7 in April. IFO officials opined that recovery has continued in spite of the latest oil shock and the fact that the sub-index of perceived current conditions slid back to a 2-month low. The forward-looking expectations sub-index jumped 1.2 points to a 56-month high of 91.6, helped by a 42-month high in manufacturing, a 7-month high in construction, an unchanged trade sector index, and in spite of a 1.9-point dip in services to a 2-month low.
The Chicago Fed National Activity Index, which had fallen in every previous month since the outbreak of the war with Iran, rose to 0.07 in September from -0.08 in August. The Dallas Fed manufacturing index rose to a 21-month high in September of 13.4 from 9.8 in September and -11.3 last December.
While election news grabbed Brazilian attention, that economy also had two data reports today. Consumer confidence in October reached a 7-month high, while the current account deficit of $5.1 billion in September was smaller than the year-earlier shortfall of $8.8 billion.
The monthly Confederation of British Industry’s October survey of distributive trades became far less negative at -10 after -55 in September and the best result in 19 months.
The State Bank of Pakistan’s policy interest rate was raised 50 basis points to 12.0% by a vote of 9-1. This was the first increase since a 100 basis point increase back in April, which in turn represented a trend reversal from a previous rate cutting cycle that began in June 2024 at 22% and ended in December at 10.5%. The Monetary Policy Committee agreed to the rate hike following a consumer price inflation downtick to 10.3% last month from 11.1% in August because of these observations:
The intensification in the Middle East conflict, and low prospects of its near-term resolution, are keeping global energy prices at persistently elevated levels. While the impact of this global shock on the domestic economy has remained contained so far amidst proactive monetary policy adjustment and continued fiscal discipline, geopolitical developments have worsened the inflation outlook as compared to the earlier assessment. The MPC deemed today’s decision as necessary to keep inflation expectations anchored, contain second-round effects of the ongoing supply shock, and bring inflation within the target range of 5 – 7 percent.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: elections in Brazil and Serbia, German business climate index, State Bank of Pakistan
ShareThis
