Could Middle East conflict boost Caribbean energy revenue?

As geopolitical conflict drives energy price speculation, Trinidad and Tobago's Energy Minister has urged the public to temper expectations of a revenue windfall, warning that any gains from higher oil and LNG prices could be offset by rising import subsidy costs — a cautionary lesson echoed across a Caribbean region already navigating modest growth and elevated global uncertainty.

At a post-Cabinet news conference, Trinidad and Tobago's Minister of Energy and Energy Industries, Dr Roodal Moonilal, offered a measured assessment of the potential revenue impact of rising global energy prices linked to the ongoing Middle East conflict. The Minister cited Brent crude trading above US$82 a barrel, stating that if this US$12 increase were sustained, T&T could generate an additional US$10 million a month in oil revenue at the government's 50% tax rate — but cautioned that increased revenue from state-owned Heritage Petroleum's crude exports would likely be offset by higher fuel import subsidy costs borne by state-owned Paria Fuel Trading. While LNG prices have risen recently in global markets, the Minister noted that Atlantic LNG could see a 'bump' in revenues, though the ministry stated it had not yet completed its calculations on the potential impact of higher LNG prices on T&T's tax revenues.

Minister Moonilal's public messaging performs a dual function: it dampens premature public enthusiasm while signalling fiscal prudence to markets and international observers. The structural trap T&T faces — where commodity export gains are neutralised by subsidy obligations on the import side — illustrates a deeper vulnerability in the twin state-enterprise model that Caribbean policymakers often overlook during price spikes.

For the wider region, the CDB's finding that nine Caribbean countries carry debt above 60% of GDP means that any external shock, whether a commodity price reversal or an escalating conflict, carries amplified fiscal risk. The IDB notes that uncertainty in Latin America and the Caribbean reached historic highs in 2025 — more than 2.5 times higher than in 2024 — with effects spilling through trade, investment, and remittance channels.

"Excluding Guyana, regional Caribbean growth slowed to 0.6% in 2025, down from 1.4% in 2024, with nine countries carrying debt levels above 60% of GDP — leaving minimal buffer against external shocks."

— Caribbean Development Bank Annual News Conference, 2026

The ongoing war in the Middle East has pushed global energy prices higher, with Brent crude oil trading above US$82 a barrel and liquefied natural gas prices skyrocketing in Europe and Asia. For Trinidad and Tobago, a Caribbean energy-exporting nation, such price spikes historically trigger public expectations of a revenue bonanza. However, Minister of Energy and Energy Industries Dr Roodal Moonilal used a post-Cabinet news conference to deliver a sobering assessment, signalling that the country should not expect transformative windfalls.

T&T has been down this road before. When Russia invaded Ukraine in February 2022, local analysts and trade union leaders rushed to calculate potential revenue gains and wage demands, only to be blindsided by severe global supply chain disruptions that drove up the cost of imports and squeezed ordinary workers. Going further back, the 1973 OPEC oil embargo delivered massive revenues but also triggered devastating inflation that climbed from 9.30 per cent in 1972 to a peak of 22.02 per cent in 1974.

The late Jamaican Prime Minister Michael Manley once observed that money passed through Trinidad and Tobago like a dose of salts, a pointed critique of the country's historical inability to prudently manage energy windfalls. That cautionary legacy looms large over the current moment.

Caution over commodity optimism: Minister Moonilal explicitly cautioned that T&T should not expect a windfall from rising energy prices, noting that gains from crude exports would likely be offset by higher fuel subsidy costs and that LNG revenue calculations remained incomplete. His framing was deliberate: manage expectations before they inflate.

Structural vulnerability persists regardless of price cycles: The CDB emphasises that small, open Caribbean economies face persistent exposure to external shocks, with fiscal consolidation stalling and debt vulnerabilities entrenched. The Bank's development imperatives — diversification, resilience by design, and stronger fiscal institutions — point to structural reform as the only durable buffer against commodity price volatility.

Regional uncertainty at historic highs demands new policy playbook: The IDB warns that uncertainty in LAC reached more than 2.5 times its 2024 level in 2025, driven by US policy shifts, geopolitical realignment, and dense electoral calendars. Modest projected growth of 2.3% for 2026 remains below global averages, with gains uneven and fragile across the region.

"Small, open economies remain highly exposed to external shocks. What is more concerning in this moment is the persistence of uncertainty and the narrowing room for policy error."

— Jason Cotton, Acting Deputy Director of Economics, via Caribbean Development Bank Annual News Conference

Minister Moonilal deserves credit for resisting the temptation that has undone Caribbean governments before: the rush to spend money not yet earned. The historical record is unambiguous — from the inflationary spiral that followed the 1973 OPEC embargo to the misplaced optimism of 2022 — commodity windfalls promised in wartime rarely arrive intact.

But prudent messaging is not the same as structural reform. The real issue exposed by this episode is that T&T's energy architecture — where export gains on one side of the ledger are neutralised by subsidy obligations on the other — leaves the country perpetually treading water during price spikes. The Caribbean cannot afford another cycle of boom-era rhetoric followed by austerity-era reckoning.

What the CDB and IDB are telling the region — diversify, build resilience by design, strengthen fiscal institutions — is not new advice. The question in 2026 is whether governments have the political will to act on it before the next shock arrives.