Daily Briefing | October 13, 2026: Oil Prices and US Dollars Rise Together, Computing Power and Trade Rearrange

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Today's main theme

Over the past day, the market has faced two types of "cost reassessments" simultaneously: one from war and energy. Saudi Arabia's capital airport was extended after a series of attacks, and Russia was accused by Ukraine of continuing to attack energy facilities. Brent crude oil rose to around $107 a barrel, and the dollar hit an 18-month high on safe-haven concerns and inflation concerns. The other category comes from industry and trade. Microsoft is preparing to deploy its self-developed Maia 300 chip on a large scale to reduce AI computing power costs and reliance on external suppliers; China and Europe, in turn, used import quotas to resolve the dispute over Chinese hybrid vehicles in exchange for predictable trade arrangements. The common theme is that high interest rates have not deterred strategic investment, but they have forced governments and businesses to pay more attention to energy security, computing efficiency, supply chain autonomy, and market access. In the short term, pricing will depend on US inflation and the progress of the conflict; in the medium term, it will depend on whether these costs can be absorbed by productivity, policy support, and industrial upgrading.

Five key news items

1. The US dollar rose to an 18-month high as oil prices and safe-haven demand reignited interest rate pressures.

On October 12, the US dollar index rose 0.37% to 102.58, its highest level since April 2025; The euro fell to about $1.1156, near a 17-month low, while the dollar rose to 158.66 against the yen. Funds are avoiding the risk of conflict in the Middle East while awaiting this week's US consumer price data for September. Brent crude rose 2.3% to $107.17 a barrel that day, about 45% higher than before the outbreak of the US-Israel war on Iran, adding to concerns about the resurgence of inflation. The market still gives about a 78% probability that the Federal Reserve will keep interest rates unchanged this month, but Cleveland Fed President Hamak advocates that restrictive policies should be maintained more quickly. Long positions in the US dollar had increased to approximately $36 billion as of October 7, compared to only $8.4 billion three weeks ago. The impact is further tightening of global financing conditions and increased pressure on the currencies of the euro, yen and high-debt emerging markets. The core variables going forward are the US CPI, the sustainability of oil prices, French debt risk, and communication from the Federal Reserve.Source: Reuters

2. Microsoft releases Maia 300, plans to deploy over a million self-developed AI chips next year.

On October 12, Microsoft announced its third-generation self-developed AI acceleration chip, the Maia 300, and plans to begin "multi-gigawatt" deployments starting in 2027, with a potential quantity exceeding 1 million units, for Microsoft's internal AI services and model inference and complex agent tasks on Azure. The Maia 300 uses a chip architecture: the key computing parts use TSMC's 2nm process, while functions such as data transmission use the lower-cost 3nm process. Each rack accommodates 96 chips and consumes approximately 167 kilowatts of power; Microsoft stated that its effective computing power per megawatt is about 40% higher than that of leading GPU systems, but did not disclose specific comparisons. The company expects capital expenditures to exceed $175 billion this year, indicating that the cost reduction goal does not mean cutting AI investment, but rather increasing output per watt and per dollar through the synergy of chips, racks, networks and software systems. For Nvidia and the cloud computing industry, this will strengthen the vertical integration of large platforms. Going forward, it depends on the mass production yield, actual model performance, Azure customer adoption rate, and whether the million-unit scale can be delivered on schedule.Source: Reuters

3. China and the EU finalize hybrid vehicle import arrangements, exchanging quotas for a cooling of trade frictions.

China's Ministry of Commerce disclosed on October 12 that after three months of intensive consultations, China and the EU have reached new arrangements for Chinese hybrid vehicles to enter the EU. The EU plans to limit imports of hybrid vehicles from China to 350,000 units per year starting in early December, and allow quotas to increase by 6% annually. The measures will last for four years and will also apply to other trading partners. The EU estimates that this will reduce China's hybrid vehicle exports to the EU by more than half, which could have reached 800,000 units by 2026, and reduce the market share of Chinese-made cars in the EU from about 12% to 6%. China emphasized that the quotas China receives should not be lower than those from other sources, the measures should not target or discriminate against Chinese companies, and should be increased based on the 2025 level to ensure stable growth. The agreement avoids an immediate escalation of the dispute, but it will prompt Chinese automakers to accelerate local production in Europe, model restructuring, and supply chain layout. It remains to be seen whether the EU summit will add trade defense tools, quota allocation details, and whether similar progress can be made in the negotiations on tariffs on pure electric vehicles.Source: China negotiation results, Reuters；Source: Details of EU measures, Reuters

4. Riyadh airport closure extended until Saturday as regional conflict begins to impact aviation and investment activities.

On October 12, Saudi Arabia's civil aviation authorities extended the closure of Riyadh's King Khalid International Airport until 21:00 (GMT) on October 17, citing the need to complete facility security and operational preparations. The airport, Saudi Arabia’s second-busiest after Jeddah, has been suspended since Saturday’s Houthi attack that killed 13 people and injured more than 300. Another round of attacks on Sunday killed one person and injured nearly 12 others. The Houthis claimed another attack on the airport with ballistic missiles on Monday, while Saudi Arabia said it had intercepted a missile aimed at Riyadh, prompting several airlines to cancel or extend their flight suspensions. Importantly, the conflict has expanded from oil tankers, straits, and energy facilities to major civil aviation hubs, directly impacting passengers, cargo, insurance, international conferences, and Saudi Arabia's plans to attract investment. Continued closures will drive up diversion and supply chain costs and deepen the risk premium for Gulf assets. Going forward, attention should be paid to whether the airport will resume flights on schedule, the extent of airline suspensions, the strength of Saudi Arabia's counterattack, and whether the United States will expand its intervention.Source: Reuters

5. Ukraine claims Russian forces attacked six energy targets, prompting the EU to impose its largest sanctions since the invasion.

Ukrainian President Volodymyr Zelenskyy said on October 12 that Russian airstrikes on at least six energy targets overnight and in the morning, including natural gas facilities and gas stations, indicate that the "energy ceasefire" previously announced by US President Trump has not been implemented. Ukraine stated that it did not attack a Russian oil refinery that night and was willing to cease fire if Russia reciprocally complied. The Kremlin said negotiations were still ongoing, but rejected Zelensky's proposal for a 60-day comprehensive ceasefire, emphasizing that Russia was seeking "long-term peace" rather than a ceasefire. The night attack in Kharkiv killed at least three people, and subsequent attacks injured at least 22 more. Kyiv's electricity, water supply, and metro systems had previously been continuously affected. On the same day, EU foreign ministers added 1,569 individuals and entities to the sanctions list, calling it the largest single sanctions package since 2022. The incident means that energy infrastructure remains the core lever of the winter war and fuel prices. The next step will be to observe whether Russia formally accepts verifiable arrangements, attack records, sanctions enforcement, and whether the US-Russia diesel deal will weaken Western pressure.Source: Reuters

Market Correlation and Today's Observation

The current market chain is relatively clear: risks in the Middle East and Russia-Ukraine are pushing up crude oil and refined oil products, while energy inflation is raising long-term interest rates and the US dollar, ultimately compressing financing space for overvalued assets and emerging markets. If the US CPI is higher than expected, the market may raise the probability of a Federal Reserve rate hike again, causing the US dollar index and US Treasury yields to rise in tandem. If the data is moderate, safe-haven demand may still limit the dollar's decline. In terms of exchange rates, the euro is also dragged down by French fiscal risks, while the yen faces expectations of intervention as it approaches the 160 mark. On the commodity side, in addition to Brent crude oil, diesel cracking price spreads, aviation fuel, and shipping insurance premiums should also be monitored, as airport and strait risks are shifting from "expected" to real operational disruptions.

The key to technology valuation has shifted from "whether there is a demand for AI" to "computing power per watt and return on capital". Microsoft's self-developed chips strengthen the bargaining power of cloud vendors, which may reduce unit inference costs, but it also means higher upfront capital expenditures, leading to structural differentiation in the power supply chains of Nvidia, TSMC, and data centers. On the Chinese policy and industry side, the Sino-European automotive quota has reduced the uncertainty of the worst-case scenario, but the export ceiling will drive local factory construction, brand concentration, and supply chain relocation. Whether RMB and Chinese equity assets can benefit also depends on domestic demand, corporate profits, and subsequent measures to stabilize growth. Today, US inflation expectations, oil prices, the US dollar, the progress of Riyadh's flight resumption, the loss of Russian and Ukrainian energy facilities, and the details of the implementation of China-EU quotas should be tracked in the same risk map.

Cover image:imgix / Unsplash