Daily Geo-Energy Intelligence Digest - May 13, 2026

1) EXECUTIVE RISK SNAPSHOT

Regime: Stabilizing risk tone, reflecting easing immediate tensions despite ongoing geopolitical frictions.
Contagion Status: Moderate cross-regional spillover evident, with Middle East conflicts influencing global energy prices and inflation dynamics.

2) FULL INDEX DECOMPOSITION

• GERI (Global Energy Risk Index): 17 (-6)

- Significant decline driven by easing physical crude premium pressures despite Hormuz Strait tensions.

• EERI (Energy Event Risk Index): 16 (+4)

- Increase due to intensified geopolitical alerts: Middle East war risks, Venezuela oil spill, and Ukraine conflict escalation.

• EGSI-M (Energy Geopolitical Stress Index - Medium): 5.87

- Stable, reflecting balanced risk between elevated event risk and improving market sentiment.

3) MULTI-REGION SPILLOVER ANALYSIS

• Middle East → Global: Persistent Hormuz Strait disruptions elevate crude price volatility (+2.97% Brent), sustaining inflationary pressures in the US.


• South America → Global: Venezuela’s oil spill and Petrobras earnings miss contribute to regional supply concerns, pressuring energy equities.


• Europe → Global: Russian attacks causing power outages and Ukraine’s enhanced air defenses create mixed signals; energy supply risks contained but geopolitical risk elevated.


• Cross-regional contagion: Elevated Middle East risk amplifies global crude price sensitivity; South American supply issues add to risk premium despite physical premium collapse.

4) CROSS-ASSET SENSITIVITY DASHBOARD

| Asset | Move (%) | Sensitivity to GERI | Sensitivity to EERI | Interpretation |
|--------------|----------|---------------------|---------------------|--------------------------------|
| Brent Crude | +2.97% | High (+) | Moderate (+) | Price up on geopolitical war risk despite premium collapse. |
| TTF Gas | -0.43% | Low (-) | Low (-) | Slight decline despite European outages; storage stable. |
| VIX | -0.39% | Moderate (-) | Moderate (-) | Volatility easing as risk tone stabilizes. |
| EUR/USD | -0.23% | Moderate (-) | Moderate (-) | Euro weakens amid geopolitical uncertainty and inflation concerns. |
| EU Gas Storage | +0.10% | Low (+) | Low (+) | Storage steady, mitigating short-term supply risk. |

5) DIVERGENCE ANALYSIS

• Physical crude premiums collapsed despite Hormuz Strait crisis, indicating market anticipates alternative supply routes or demand destruction.


• Brent crude prices up 2.97%, suggesting financial markets price in risk premium beyond physical market signals.


• TTF gas down slightly (-0.43%) despite European power outages, reflecting effective storage and resilience.


• VIX down (-0.39%) despite elevated event risk, indicating market confidence in risk stabilization.

6) REGIME CLASSIFICATION + TRANSITION PROBABILITY

• Current regime: Stabilizing (low-to-moderate risk).


• Probability of transition to heightened risk regime within 2 weeks: ~30%, driven by potential escalation in Middle East (notably Iraq’s critical May 27 date) and Venezuela environmental risks.


• Probability of regime relaxation to low risk: ~20%, contingent on de-escalation in Hormuz and improved Petrobras outlook.

7) SECTOR IMPACT FORECAST

• Power: Short-term stress from Russian attacks and outages; mitigated by Ukraine’s improved air defenses and stable EU gas storage. Neutral to slightly negative.


• Industrial: Elevated input costs from Brent crude rise; inflationary pressures may constrain demand growth. Negative bias.


• LNG: Stable prices and storage suggest limited near-term upside; regional supply disruptions offset by demand diversification. Neutral.


• Storage: Slight increase in EU gas storage (+0.10%) supports supply buffer; positive for storage operators.

8) PROBABILITY FORECASTS WITH DRIVER ATTRIBUTION

• High Brent crude price scenario (> $110/bbl) within 1 week: 45%

- Drivers: Middle East war risk, Saudi Aramco CEO warnings, Venezuela spill impact.

• European gas price spike (> €50/MWh) within 2 weeks: 20%

- Drivers: Potential escalation of Russian attacks, colder weather risk minimal.

• Market volatility spike (VIX > 20) within 1 week: 25%

- Drivers: Political uncertainty in Iraq, US inflation concerns.

9) SCENARIO FORECASTS

• Scenario 1: Middle East Escalation (40%)

- Brent crude surges >$115; inflation spikes; energy equities volatile; risk assets under pressure.
- Portfolio: Increase energy hedges, reduce industrial exposure.

• Scenario 2: Risk Stabilization (35%)

- Physical crude premiums remain low; Brent stabilizes ~ $105-$110; inflation moderates; equities recover.
- Portfolio: Maintain current positioning, monitor geopolitical developments.

• Scenario 3: Supply Shock Mitigation (25%)

- Alternative supply routes offset Hormuz risk; Petrobras recovers; gas prices stable.
- Portfolio: Favor industrials and power sectors; reduce energy hedges.

10) CUSTOM WATCHLIST

• May 27 Iraq political developments: High potential for risk regime shift.


• Saudi Aramco CEO statements: Monitor for market sentiment shifts.


• Venezuela oil spill updates: Environmental risk and supply disruption potential.


• Ukraine air defense effectiveness: Key for European energy security.


• Petrobras earnings revisions: Indicator of South American supply risk.

11) STRATEGIC INTERPRETATION

Despite ongoing geopolitical tensions, particularly in the Middle East and South America, the energy market shows signs of risk stabilization. The paradox of collapsing physical crude premiums amid rising Brent prices suggests market participants are pricing in medium-term supply risks while anticipating short-term demand adjustments or alternative supply routes. European gas markets remain resilient due to stable storage and improved defense against Russian disruptions. However, the critical political timeline in Iraq and environmental risks in Venezuela pose significant upside risk to energy prices and volatility. Traders should prepare for potential regime shifts around late May, balancing energy exposure with inflation-sensitive industrial sectors.

Informational only. Not financial advice.