2026 Fourth Quarter Forecast Report

Around the world, the Horn of Africa will remain a key area of concern in Q4, as renewed tensions in Ethiopia, Eritrea, Tigray, and Sudan risk connecting conflicts across the region and increasing instability along the Red Sea. In Central Africa, continued insecurity and humanitarian pressures in the Democratic Republic of the Congo will persist despite diplomatic efforts to constrain fighting. Across Southeast Asia, Myanmar and Indonesia face continued security pressures, including armed conflict and civilian displacement in Myanmar and escalating violence in West Papua and growing domestic economic and political tensions in Indonesia. In the Western Hemisphere, Cuba’s deepening humanitarian crisis and rising U.S. pressure stand in contrast to improving economic conditions in Venezuela. 

In Q4, the U.S. is expected to expand the use of tariffs and other trade restrictions against countries with whom tensions already exist and ease restrictions on cooperative partners. While the broader U.S.-China trade truce is likely to hold, competition in sectors such as AI, semiconductors, and technology will intensify. Meanwhile, disruptions to shipping corridors in the Middle East will increase pressure on alternative trade routes and reinforce efforts to diversify global supply chains.

U.S. tech policy will take center stage in Q4 as it aims to pass legislation to strengthen AI competitiveness, advance quantum initiatives, and reduce dependence on China for critical technologies and minerals. The outcome of the Trump-Xi summit will shape the trajectory of advanced-chip exports to China, while the American AI Exports Program and continued competition with Chinese AI models accelerate U.S. technology development. Federal action on AI safety is unlikely, while congressional efforts on quantum technology and critical-minerals diversification could establish priorities for 2027.

Global energy markets will remain volatile in Q4 as the U.S.-Iran war, disruptions to Gulf exports, and threats to Red Sea energy flows constrain oil and gas supplies. Limited OPEC bypass capacity and constrained alternative routes will make it difficult to fully offset supply losses, keeping oil and LNG prices elevated while increasing competition among European and Asian importers. Governments and major energy consumers are likely to place greater emphasis on securing shipping corridors, diversifying supplies, and developing alternative energy sources.

Global power demand and electricity grid stress will increase in Q4 as AI data centers, electrification, and a potentially colder European winter will pressure energy systems. Growing power demand and elevated fossil-fuel prices will support continued investment in renewables, energy storage, small modular reactors, green hydrogen, and AI-enabled grid management, though supply-chain constraints could limit deployment. Record-breaking climate events are in store as intensifying El Niño conditions coupled with ongoing climate change is likely to bring more severe droughts, storms, and flooding toward the end of the year.

_{Photo: US President Donald Trump reacts as a bomber flies overhead during the US national anthem at an arrival ceremony for Chinese President Xi Jinping at Joint Base Andrews in Maryland on September 23, 2026. Xi is visiting the United States from September 23 to 25. (Photo by Brendan Smialowski / AFP via Getty Images)}