Daily Economic Update

Oil: Brent pares back Tuesday's gains on Iraq-Kurdistan deal but remains above the $100/bbl mark. Brent futures were trading lower this morning in Asian markets, at around the $101/bbl (-2.3% d/d) level, following reports that Iraq and the Kurdistan Regional Government have reached an agreement that allows Baghdad to export 100 kb/d of crude via the semi-autonomous region’s pipeline to Turkey’s port of Ceyhan in the Mediterranean, starting immediately. According to Iraq’s oil minister Hayyan Abdulghani, exports could rise to 200–250 kb/d, although inspections of rehabilitated pipeline segments that had been offline since 2014 due to damage are expected to be completed within a week. Iraq has been among the most exposed producers during the recent crisis, with crude output currently at around 1.5 mb/d, roughly 3 mb/d below its March OPEC+ quota of 4.273 mb/d. The country’s alternative export routes remain limited, with Baghdad reportedly seeking Iranian approval to allow some of its tankers to transit the Strait of Hormuz. Brent had closed higher yesterday at $103.4/bbl (+3.2% d/d) to reflect Iran’s attacks on upstream gas infrastructure and the assassination of its security chief Ali Larijani by the Israelis. Tuesday was the fourth consecutive trading session that closed with Brent above $100/bbl. With no clear off-ramp and no signs of de-escalation as the war enters its third week, the back end of the forward curve has continued to firm, reflecting rising expectations that the conflict may be prolonged. President Trump’s calls for NATO partners to send warships to help unblock the Strait of Hormuz have gone unheeded, earning them a rebuke from the President as a “foolish mistake” and a retort that “we don’t need them.” Elsewhere, Canada has pledged 23.6 mb over the coming months to support the IEA-led stabilization effort. In the absence of a strategic petroleum reserve, Canada indicated that the contribution would come via higher production, with additional volumes expected to reach the market from April over a three-to-six-month period, implying an incremental supply increase of around 128–260 kb/d.

UAE: Central bank launches resilience package amid the ongoing Middle East conflict. The CBUAE board approved a proactive Financial Institution Resilience Package aimed at reinforcing stability and ensuring uninterrupted credit availability in the economy. The package spans five pillars: (i) enhanced access to reserve balances up to 30% of cash reserves and term liquidity facilities in AED and USD, (ii) temporary relief in liquidity and stable funding ratios, (iii) temporary release of the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCB), (iv) postpone classification of individual and corporate loans for customers affected by the extraordinary circumstances, (v) and a reaffirmation that banks must continue supporting customers and the wider economy. The board also reaffirmed the resilience of the financial system amid ongoing global and regional turbulence, including FX reserves exceeding AED 1 trillion and a monetary base cover ratio of 119%. It highlighted the solid liquidity conditions with banks holding nearly AED 920 billion in combined liquidity and eligible assets, including more than AED 400 billion in reserve balances, supplementing the central bank readiness to deploy additional tools if needed to anchor confidence in the economy.

Europe: EU to resume ratification of the trade deal with the US, but makes the deal conditional on the US honoring that agreement. The European Union is moving to restart the ratification process of its long-delayed trade agreement with the US. According to the Chair of the European Parliament’s trade committee, there is a broad majority supporting a “compromise package” that will allow a committee vote on Thursday. If approved, the deal will proceed to a full parliament vote later this month or in April. If parliament endorses the accord, the final step would be approval by the EU member states. It seems that lawmakers are opting to advance the process despite recent US investigations against more than 60 countries (including the EU bloc) with regards to trade practices, which will lead to new tariffs, though an added amendment by the European Parliament ensures the agreement will not take effect until the US fully complies with its prior commitments. The EU’s decision to go ahead with the ratification seems to reflect a strategic push to finalize transatlantic trade cooperation despite ongoing tensions with Washington. The amendment linking implementation to US compliance serves both as a safeguard and a political signal of EU unity and conditional engagement.

Japan: Exports beat expectations for the second month in February; PM Takaishi to meet President Trump on Thursday. February's trade data showed exports growing 4.2% y/y, slowing down from January's 17% surge but still beating consensus estimates of 1.6% growth. Growth was driven by robust demand from the European Union (+14% y/y) and ASEAN countries (+5.1%), while exports to China and the US fell 11% and 8%, respectively. For the US, this marks the tenth month of declining exports following the April 2025 Liberation Day tariff announcement. Meanwhile, imports rebounded to increase by 10.2% y/y after dropping in January, but were below consensus estimates of an 11.5% increase. Meanwhile, PM Takaishi will hold a summit with President Trump on Thursday in Washington. The meeting comes at a difficult time given the Middle East war and Trump’s earlier request for allies, including Japan, to help in unblocking the Strait of Hormuz including through sending warships. Takaichi has mentioned that she expects to have “an extremely difficult” visit, indicating that she will explain to Trump what Japan is legally able to do as well as cannot do.   

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