About this work
The geopolitical shock reaches beyond oil prices into supply-chain reliability, input costs and financing. Energy-price stabilization would not necessarily remove premiums on gas, fertilizer, shipping and intermediate goods. US consumption, AI investment and energy capacity provide more protection than Europe has, without eliminating exposure. For emerging markets, capital allocation increasingly favors stronger reserves, credible policies and lower energy-import or refinancing risks.
Cite this work
Marcello Estevão, Jonathan Fortun (2026). IIF Capital Flows Report: The Long Tail of the Shock. Institute of International Finance.