Hou Wey Fook Chief Investment Officer DBS
Global financial markets face an overlooked oil shock risk as technology companies accelerate power spending to support computing growth. DBS Bank noted that investors remain overly focused on acquiring power infrastructure while disregarding potential fuel supply disruptions. As a result, energy costs could rise steeply if supply chains experience unexpected operational pressure.
Growing AI Spending and Power Strain
Annual capital expenditure tied to artificial intelligence is projected to reach approximately USD 1 trillion over the coming years. Meanwhile, reserve life across integrated oil majors has dropped by roughly one-third since its 2014 peak. This imbalance creates tighter operating conditions across worldwide power generation systems.
“AI may be powered by computing, but its growth ultimately depends on access to sufficient, reliable energy. Oil is part of a broader energy system that will have to support rising power demand while maintaining energy security.”
Hou Wey Fook, Chief Investment Officer, DBS Bank
Evaluating the Oil Shock Risk in Global Trade
In addition, the underpriced oil shock risk stems from prolonged underinvestment in traditional extraction. Chokepoints such as the Strait of Hormuz and the Bab-el-Mandeb Strait remain vulnerable to regional maritime tensions. Consequently, prolonged interruptions along these primary transit routes could push crude prices well above USD 100 per barrel.
The bank expects Brent crude to average USD 90 per barrel during the third quarter of 2026. Prices may ease toward USD 86.50 in the fourth quarter if geopolitical stability improves. However, energy security will likely stand alongside technological expansion as a primary driver of economic performance.
Price Projections for Oil and Gold
Gold prices are forecast to reach USD 5,000 per ounce in the third quarter of 2026 and rise to USD 5,300 by the fourth quarter. Structural trends like currency debasement and fiscal sustainability concerns continue to support bullion demand. Furthermore, precious metals offer crucial balance against volatile equity movements.
Portfolio Allocation and Diversification Strategies
DBS continues to maintain exposure to high-performing semiconductor producers, utilities, and infrastructure beneficiaries. Nevertheless, the institution recommends broadening holdings through its Barbell Strategy to limit downside vulnerability. Specifically, adding physical commodities, investment-grade credit with durations of five to seven years, and China A-shares provides balanced stability against unexpected market disruptions.
