In September, oil exports from the Middle East remained under pressure, while the price of Brent crude once again exceeded $100 per barrel at several points during the month. Reuters reported that uncertainty surrounding supply and global reserves is making the market more sensitive to any new disruption.
This is also important for economies that do not have direct trade links with Iran. Energy is a fundamental input for transportation, production and a large part of the supply chain.
From Oil to Albanian Inflation
For Albanian consumers, the most direct channel is fuel.
A sustained increase in oil prices can raise transportation and business costs, gradually putting pressure on the prices of goods and services as well.
The Bank of Albania has assessed that increases in international oil prices can feed through into domestic inflation. In its analysis for 2026, the central bank linked the increase in oil prices to an expected rise in imported inflation and highlighted the conflict in the Middle East as an important source of uncertainty for the Albanian economy.
Therefore, a geopolitical crisis far from Albania can have a very concrete effect: higher costs of moving, producing and consuming.
What About the Exchange Rate and Interest Rates?
The impact does not stop at the price of oil.
During periods of uncertainty, global markets may shift capital toward currencies and assets perceived as safer. This can affect exchange rates and, for small and open economies, the cost of imports.
Meanwhile, if higher energy prices fuel higher and more persistent inflation, central banks may have less room for more accommodative monetary policies. In Albania, this would be particularly important for households and businesses with variable-rate loans.
The Bank of Albania has kept its policy rate at 2.5% and has emphasized that monetary policy will continue to closely monitor developments in prices and international markets.
This means that an external shock does not automatically translate into higher interest rates in Albania. However, the longer and stronger the increase in energy costs, the more important it becomes for central banks to assess whether inflation is temporary or becoming more persistent.
How Far Away Is the Crisis from Albania, Really?
The connection is closer than it may appear.
Albania imports energy and goods, while its economy is part of a European market that is directly affected by developments in global energy and financial markets.
Therefore, the question is not whether Albania has direct exposure to Iran. The question is how long and how severe the shock to global markets will be.
If tensions ease and energy flows normalize, the pressure may remain limited. If disruptions persist, the effect may gradually move from oil to inflation, from inflation to monetary policy and then to the cost of financing.
Source: Reuters • Bank of Albania
FINARCH RECOMMENDS
Do not plan your finances as if markets will always remain calm.
Geopolitical crises show that an event in one part of the world can quickly affect the cost of living and financing in another country.
For households and businesses, this means looking beyond today’s interest rate or price and considering how resilient the financial solution is to changes in market conditions.
Before taking out a loan, making an investment or taking another financial decision, assess different scenarios: what happens if costs increase, if the exchange rate changes, or if interest rates remain higher for longer?
Our recommendation:
Do not make financial decisions based solely on today’s conditions. Compare alternatives, understand the risks and plan with a longer-term horizon.
Because the global economy may be far away. But its effects can be very close to home.
This material is for informational purposes only and does not constitute individual financial or investment advice.