Author: IntaCapital Swiss

The role of capital advisory in navigating non-traditional funding

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

Access to capital remains one of the defining challenges for expanding corporations, project sponsors, and established businesses. Even highly viable commercial opportunities frequently struggle to obtain funding because the applicant falls outside a bank’s standard underwriting policy, requires a more sophisticated financing structure, or simply does not hold sufficient conventional collateral.

Traditional business funding models depend heavily upon the borrower offering existing real estate, cash deposits, receivables, or listed investments as security. While this framework works well for stagnant or mature portfolios, it fails to account for the realities of modern corporate growth. Often, credible projects require substantial funding before core operating assets have been acquired, developed, or fully completed.

Stepping into alternative credit markets resolves this bottleneck, but it introduces highly complex legal, custodial, and structural frameworks. Navigating this environment successfully depends entirely on expert transaction architecture—making professional alternative capital advisory the vital bridge between a security shortfall and funding execution.

The core challenge: Financing assets pre-acquisition

The modern collateral deficit occurs because capital-intensive initiatives require upfront funding before they can generate tangible assets or operating revenue. A property developer may need capital to purchase raw land; an infrastructure project may require funding before breaking ground; or an expanding corporation may need finance to execute an acquisition before gaining control of the target company’s assets.

When local commercial lenders decline these applications due to an asset backing deficit, capital advisors must look to more sophisticated financial engineering. The most effective mechanism to bridge this specific gap is a structured Collateral Transfer Facility.

How a debt security collateral transfer facility solves the gap

A Debt Security Collateral Transfer Facility is a specialised contractual arrangement where a third-party asset owner (the Provider) agrees to make the collateral value of an established, pre-existing Debt Security available to a borrowing company (the Recipient) for an agreed contractual period and fee. The Provider retains legal and economic ownership of the security, while the asset is placed under an approved blocking, control, or security arrangement for the benefit of the Recipient’s nominated lender.

The Recipient may then present this verified collateral framework to a suitable lender or funding partner as part of a secured structured finance application.

Why alternative transactions require dedicated capital advisory

Alternative capital transactions require considerably more than a simple introduction between a borrower and a source of collateral assets. A workable, compliant transaction must seamlessly align the distinct requirements of multiple professional counterparties—namely the borrowing Recipient, the asset Provider, and the nominated lending bank.

For companies seeking expert capital structure advisory, the objective of an advisory firm is to act as the central orchestrator, developing a coherent transaction from the outset rather than submitting an incomplete funding request and expecting counterparties to construct a solution around it. To satisfy these diverse institutional stakeholders, a capital advisor must systematically prepare, review, and coordinate a comprehensive operational package:

  • Corporate & compliance profiles: Assembling beneficial ownership information and strict corporate documentation.
  • Commercial rationale: Clarifying project summaries, detailed business plans, and use-of-funds schedules.
  • Financial modeling: Verifying financial statements, performance forecasts, and proposed loan terms.
  • Custodial oversight: Mapping out specific custody, asset-location, and collateral-control mechanics.
  • Legal protections: Formatting the precise contractual conditions under which the asset will be blocked, controlled, released, or enforced upon.

A direct alternative to traditional SWIFT instruments

Historically, alternative capital-raising transactions relied almost exclusively on leased bank guarantees (BGs) or standby letters of credit (SBLCs). While effective, these structures require an issuing bank to create a brand-new demand liability under URDG 758 rules—a process vulnerable to shifting bank credit appetites and high SWIFT transmission fees.

By utilizing an existing Debt Security as the direct collateral medium, capital advisors can bypass these retail banking bottlenecks and secure non-bank debt financing that offers distinct strategic benefits::

  • No new instrument creation: The transaction utilizes an already existing, recognizable financial asset capable of being instantly identified, valued, and held within an established custody framework.
  • Custody-led control: The structure is administered via direct bilateral control, escrow, and blocking arrangements rather than a bank-issued demand liability, keeping the transaction transparent.
  • Strategic resource preservation: This method allows corporate borrowers to access highly coveted non dilutive capital solutions, approaching lenders with a robust security package without forcing equity dilution, joint-venture partnerships, or the fire-sale of core operating assets.

Navigating the coordinated transaction process

A successful collateral-supported financing moves through a disciplined, multi-stage process where the advisory firm manages communication lines from assessment to final deployment:

Stage 1: Eligibility & feasibility assessment

The advisory team reviews the applicant’s core business case, funding objectives, and proposed repayment model to ensure the underlying deal is commercially viable and suitable for alternative structures.

Stage 2: Transaction preparation & structuring

The applicant’s documentation is assembled, the intended use of funds is clarified, and the commercial structure—including collateral value, contractual duration, and the Provider’s Contract Fee—is established.

Stage 3: Preliminary approval & documentation

The complete proposal is submitted for underwriting review by the Provider. Upon acceptance, the relevant offering, collateral transfer, escrow, and custody-blocking documentations are drafted.

Stage 4: Lender engagement & implementation

The nominated lending institution undertakes its independent credit, legal, valuation, and compliance assessments. Once all agreed conditions are satisfied, the security is blocked, and the lender releases the financing.

The foundation of funding success: The exit strategy

An alternative capital structure requires a precise, contractually aligned timeline. Because the underlying Debt Security is made available for a fixed period, the associated borrowing must be fully repaid, refinanced, or replaced before the facility expires.

To understand how to structure this pathway and ensure your borrowing terms align perfectly with your collateral facility, read our in-depth guide on why your exit strategy dictates your alternative funding success.

Connect with our capital advisory team

Alternative capital raising requires professional structuring, disciplined preparation, and realistic expectations. No responsible capital advisor can guarantee funding before independent credit, legal, and compliance reviews are complete. For credible companies, project sponsors, and teams evaluating the best financial advisory firms for corporate debt restructuring or balance-sheet optimisation, a Debt Security collateral facility offers a compelling alternative where conventional security is unavailable.

Based in Geneva, IntaCapital Swiss specialises in the structuring and facilitation of alternative capital-raising transactions. We bring together the financial, legal, and operational elements required to present complex transactions effectively to international markets. Contact our expert advisors today to request an initial feasibility assessment.

Why your exit strategy dictates your alternative funding success

Written by IntaCapital Swiss on . Posted in News & Reports. Leave a Comment

When mid-market corporations or project sponsors look beyond conventional banking channels, they often discover a dynamic ecosystem of custom financial solutions. However, many sophisticated funding requests fail during underwriting for one specific reason: the applicant focused entirely on how to get the capital, rather than how to exit the transaction.

In the landscape of non-traditional corporate liquidity, your repayment pathway is not an afterthought—it is the foundation of the entire deal architecture. Whether you are funding an energy plant, a corporate buyout, or a major real estate development, designing a sustainable alternative capital structure dictates your ultimate success.

What is an exit strategy in alternative corporate capital?

An exit strategy in alternative capital raising is a verified, legally documented plan that details exactly how a borrower will repay, refinance, or replace a temporary credit facility before its contractual expiration date, thereby releasing all supporting collateral back to the asset owner free of liens.

The role of capital advisory in transaction architecture

Professional capital advisory firms evaluate the holistic viability of a funding request. Rather than simply introducing capital, an advisor builds a coherent transaction by balancing the commercial goals of the borrower, the strict underwriting criteria of the lender, and the risk parameters of the asset custodian.

Many corporate sponsors mistake alternative capital vehicles for a simple matching service. In reality, preparing a transaction for international clearinghouses requires coordinating corporate beneficial ownership information, use-of-funds schedules, and comprehensive financial statements.

Furthermore, advisors utilize specialized credit enhancement techniques—such as blocking high-grade financial instruments in institutional networks—to fundamentally improve the transaction’s credit profile and secure lender approval. Without this disciplined preparation, approaching the market with an incomplete funding request invariably leads to structural rejection.

The mechanism of match funding

For complex projects, bridging an asset backing deficit involves aligning two entirely separate financial agreements: the underlying loan and the supporting collateral transfer deed.

This alignment is known as match funding. The duration of the commercial loan must mirror the precise period for which the third-party asset is made available. A short-term collateral bridge should never support a long-term borrowing requirement unless a verified refinancing mechanism is already locked into the structure.

Real-world applications: Structuring the repayment pathway

Alternative structures cannot transform an uncommercial transaction into a viable one. However, deploying the best strategies for asset backed finance can successfully resolve a severe security shortfall across various sectors, provided a clear repayment pathway exists:

  • Infrastructure & energy projects: Large-scale developments require substantial upfront capital before generating revenue. Temporary financial assets provide a credit cushion during construction. The clear exit occurs upon project completion, where operating cash flows or project-specific revenues are used to amortize the debt.
  • Real estate acquisition & development: A developer may need immediate capital to purchase land and begin construction before the physical asset holds sufficient value to satisfy conservative commercial bank policies. Once the building is completed and independently valued, the asset is refinanced via conventional, long-term institutional debt, fully releasing the initial collateral framework.
  • Acquisition finance: Corporate buyers can deploy alternative structures to secure bridge financing to finalize a company buyout. The exit strategy relies on gaining control of the target company’s assets and subsequently restructuring their corporate debt.

The provider’s perspective: Protecting the asset base

The private asset owners who participate in these structural frameworks are not equity partners; they do not seek corporate control or operational dilution. In return for placing their financial assets under a controlled blocking or custody arrangement, they receive a clearly defined Contract Fee.

Because they retain legal and economic ownership throughout the transaction term, their primary risk management concern is the certain, unencumbered release of their asset at the expiration date. A bulletproof exit strategy is the only mechanism that provides this institutional security, making it the single most important component of your application.

Connect with our corporate capital advisors today

As expert corporate capital advisors, IntaCapital Swiss helps you turn complex, asset-deficient funding needs into clear, bankable, and professionally structured transactions. Learn more about our alternative capital advisory services, or contact us today to request a feasibility assessment.

Bridging the Institutional Collateral Gap with Debt Securities

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Securing institutional funding is one of the most critical hurdles for expanding corporations, mid-market developers, and infrastructure project sponsors. Even when a business model is highly viable and commercially robust, standard loan applications frequently hit an insurmountable roadblock: the institutional collateral gap.

When standard borrowing paths close due to strict underwriting policies, collateral mobilization via high-grade financial assets offers an alternative. Utilising a structured pledged debt asset for collateral enhancement allows growing companies to access institutional-grade funding when traditional real estate or cash deposits are unavailable.

What is the institutional collateral gap?

The institutional collateral gap is a financial bottleneck that occurs when a creditworthy business possesses a commercially viable project but lacks the specific, conventional hard assets (such as real estate or cash reserves) required to satisfy a commercial bank’s rigid risk and security underwriting criteria.

This structural barrier often stalls high-value initiatives, such as renewable energy plants, real estate developments, or corporate acquisitions, before they can generate their first dollar of operating income.

How do debt securities bridge this shortfall?

Debt securities bridge the collateral gap by allowing a borrower to access and temporarily leverage the balance-sheet strength of a third-party asset owner. Through a structured transfer, a verified financial asset is placed under an approved custody and blocking arrangement, providing the borrower’s lender with the necessary security package to approve and release credit lines.

In a modern macro environment where traditional commercial banks have significantly tightened their lending criteria, corporate borrowers are increasingly turning to the broader landscape of alternative investments private credit markets.This shift has transformed how mid-market entities access flexible, non-bank debt arrangements.

Key financial differences: Debt securities vs. conventional security

For projects facing a severe asset deficit, the operational advantages of mobilizing existing debt securities over conventional bank-directed security are significant:

Core requirementTraditional banking channelDebt Security Collateral Transfer
Primary securityHard real estate, cash reserves, or liquid company-owned portfolios.An existing, high-grade transferable security for collateral support.
Ownership impactForces the sponsor to pledge core operating assets or dilute company equity.Preserves equity integrity; the asset is leased, not sold or permanently assigned.
Custody locationTypically tied to the lending bank’s internal custody accounts.Managed within independent, international clearing-house networks.
Structuring speedSubject to lengthy physical asset valuations and regional underwriting loops.Faster execution based on the verified market value of the pre-existing debt security.

Under what circumstances is this collateral model deployed?

A Debt Security Collateral Transfer facility is typically deployed for large-scale, capital-intensive corporate finance requirements where standard commercial borrowing is insufficient. It serves as a vital component of alternative liquidity solutions for funding infrastructure projects, real estate acquisitions, corporate buyouts, and balance sheet optimizations.

  • Infrastructure & energy: Supporting substantial upfront capital expenditures before the project reaches operational maturity and income generation.
  • Real estate development: Facilitating land acquisition and initial construction phases before the physical development can be leveraged for conventional refinancing.
  • Acquisition finance: Providing immediate transactional security to close corporate acquisitions before gaining direct control of the target company’s assets.
  • Corporate restructuring: Strengthening a company’s balance sheet positioning to satisfy international credit partners or tier-1 suppliers.

For large-scale public-private partnerships or utility developments, using project finance bonds credit enhancement allows sponsors to dramatically elevate the credit rating of their project-specific debt, securing far more favourable terms from institutional lenders.

What are the costs associated with collateralising debt assets?

The primary cost is the Contract Fee paid to the asset Provider for making the security available. This fee is strictly separate from the interest, arrangement fees, legal expenses, and transactional charges levied by the lending institution providing the credit line.

Because these financial arrangements operate on distinct contractual levels, all material costs are outlined during the initial transaction architecture. This ensures corporate treasurers can accurately assess the commercial viability of the proposed financing structure before approaching international financial markets.

Structuring a secure exit path

Because alternative collateral facilities operate on fixed contractual terms, they are designed as short-to-medium-term structural bridges. A transparent, viable exit strategy is a mandatory prerequisite for any transaction:

  • Match funding: The borrowing timeline must match the exact period for which the debt security is made available by the Provider.
  • The refinancing cycle: For property or infrastructure developments, temporary collateral supports the high-risk construction phase. Once the physical asset is completed and independently valued, it is refinanced via conventional, long-term bank lending. This refinancing repays the original loan, allowing the blocked Debt Security to be released back to the Provider free of liens or encumbrances.

Connect with our corporate capital advisors 

As expert corporate capital advisors, IntaCapital Swiss helps you turn complex, asset-deficient funding needs into clear, bankable, and professionally structured transactions. Contact us today to request a feasibility assessment.

Bypassing the Bank Guarantee: The Rise of Debt Security Collateral

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For decades, mid-market corporate borrowers and project sponsors facing asset deficits relied almost exclusively on standard bank guarantees (BGs) or standby letters of credit (SBLCs) to secure credit lines. When conventional lenders demanded security that the borrower did not own, leasing these traditional banking instruments was the primary path forward.

However, a significant shift is taking place in global corporate finance. Sophisticated borrowers and project developers are increasingly bypassing traditional bank guarantee structures in favour of a direct, transparent, and custody-led alternative: Debt Security Collateral Transfer.

What is a Debt Security Collateral Transfer Facility?

A Debt Security Collateral Transfer facility is an alternative finance structure where an asset owner (the Provider) places an existing financial debt security under an approved blocking, control, or custody arrangement for the benefit of a borrower (the Recipient). This allows the borrower to use the asset’s verified collateral value to back secured credit lines or project funding for a defined contractual period, while the Provider retains legal and economic ownership.

Unlike traditional asset disposals, the underlying asset is not sold or permanently assigned. Instead, it is made available for a specific commercial purpose, subject to agreed custody and security terms.

What is the difference between a bank guarantee and a Debt Security Collateral Transfer?

The primary difference lies in the underlying asset and the administrative protocol. A traditional Bank Guarantee requires a bank to issue a brand-new demand liability transmitted via SWIFT under URDG 758 rules. A Debt Security Collateral Transfer bypasses the bank-issued guarantee entirely, instead utilising a system of active collateral mobilisation where an already existing, verified financial asset is managed directly through clearing-house custody and bilateral control agreements.

Bypassing the intermediaries: Debt securities vs. traditional BGs

Traditional collateral transfer facilities structured around Bank Guarantees or Standby Letters of Credit require heavy bank administration. To use them, an issuing bank must draft and issue a separate demand guarantee, transmit it via complex SWIFT messaging, and subject the entire transaction to the rigid guidelines of the Uniform Rules for Demand Guarantees (URDG 758).

The debt security collateral model is one of the most effective alternatives to bank guarantees, successfully bypassing these operational hurdles. Because the underlying financial asset already exists and is held within a clear custody framework, the transaction avoids the friction of bank-issued demand liabilities.

Operational areaTraditional bank guarantee / SBLCDebt Security Collateral Transfer
Asset creationRequires a bank to issue a new, separate demand guarantee.Uses an already existing, verified financial asset as the collateral medium.
Transmission protocolRelies entirely on bank-to-bank SWIFT transmission.Administered directly via clearing, custody, and blocking arrangements.
Governing rulesGoverned by the Uniform Rules for Demand Guarantees (URDG).Governed by direct contractual agreements and custodian control deeds.
Transaction transparencyUnderwriting is tied to the internal credit appetite of the issuing bank.Highly transparent, as the underlying security is identified and verified before proceeding.

By eliminating the need for a bank to issue a separate demand guarantee, corporate borrowers gain a more direct, transparent relationship with the collateral backing their funding.

How does a Debt Security Collateral Transfer facility work?

The facility operates in a strict, custody-led four-phase cycle: A feasibility assessment, where the borrower’s repayment model is verified; Structuring & term agreement, where the Provider’s contract fee and parameters are set; Collateral placement, where the pre-existing asset is blocked in custodian networks; and funding drawdown, where the lender evaluates the blocked security and issues credit lines.

Phase 1: The feasibility assessment

The transaction undergoes an initial underwriting review to evaluate the applicant’s business case, capital requirements, and proposed repayment model to ensure the underlying deal is commercially viable.

Phase 2: Matching and term agreement

An approved Provider is matched to the transaction. Both parties establish the commercial terms, including the specific value of the Debt Security allocated, the facility’s duration, and the Provider’s Contract Fee.

Phase 3: Asset custody and control

Instead of transferring ownership, the pre-existing pledged debt asset for collateral enhancement is placed under an approved blocking, custody, or control arrangement in favor of the Recipient’s nominated lender.

Phase 4: Lender evaluation and funding

The Recipient’s lender conducts independent due diligence on the verified security package. Once satisfied with the custody and blocking terms, they proceed with issuing credit terms against the asset’s collateral value.

Why are corporate borrowers bypassing bank guarantees for debt securities?

Corporate borrowers are choosing debt securities over bank guarantees to achieve non-dilutive corporate growth strategies, eliminate heavy bank-originated SWIFT fees, and bypass the rigid, often-restrictive underwriting requirements of retail commercial banks when facing a severe asset backing deficit.

Using a pre-existing debt security offers distinct strategic advantages:

  • Retaining equity control: Rather than surrendering substantial stock or board seats to venture capitalists or private equity funds, this facility allows sponsors to secure capital while retaining equity control while expanding capital structures.
  • Overcoming the security shortfall: Conventional lenders are increasingly risk-averse, often declining highly viable projects due to a local security shortfall. Accessing a high-value debt security resolves this institutional underwriting bottleneck immediately.
  • Clear custody & identifiable value: Because a debt security is an already recognisable financial asset held within a tier-1 custody network, it is easily valued and verified by international clearinghouses, making the lender’s due diligence process far more straightforward.

What is the mandatory exit strategy for a collateral transfer facility?

Because the underlying asset is leased for a fixed term, the borrower must have a pre-planned, bulletproof exit strategy to repay or refinance the debt before the collateral transfer agreement expires. Once the loan is settled, the Debt Security is released from all blocks and returned to the Provider free of encumbrances.

An exit strategy is typically achieved through:

  • Refinancing completed assets: Utilising temporary debt security collateral to back the high-risk initial construction phase of an infrastructure or real estate development. Once completed and valued, the physical asset is refinanced through long-term conventional lending, paying off the collateral-backed loan.
  • Project revenues: Amortising and fully settling the loan facility through standard cash flows generated by the newly funded business expansion.

Connect with corporate capital advisors

As expert corporate capital advisors, IntaCapital Swiss helps you turn complex, asset-deficient funding needs into clear, bankable, and professionally structured transactions. Contact us today to request a feasibility assessment.

ECB Keeps Interest Rates on Hold

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Today, in an unanimous decision, the ECB’s (European Central Bank) Governing Council voted to keep its Benchmark deposit facility rate on hold at 2.25%. The main financing operations rate and the marginal facility were also held steady at 2.4% and 2.65% respectively*. After last month’s rate hike of 25 basis points, experts suggest that a rate increase is on the table at the governing councils next interest rate meeting on September 13th – 14th in Frankfurt main. 

*ECB Interest Rates – The ECB has three interest rates; the Key Deposit Rate is the interest rate banks receive when they deposit money overnight with the ECB. The other two facilities are the Main Refinancing Operations, which is the rate the banks pay when they borrow money from the ECB for one week, and the Marginal Lending Facility is the rate banks pay when they borrow money overnight from the ECB.

Indeed, after the interest rate announcement, ECB President Christine Lagarde announced that there could be a possible rate hike in September having rejected a move to increase rates today. She went on to say, “we were positioned adequately  to wait and be very attentive in the next few weeks to the development of the situation and to the data that we will be receiving in the next few weeks”. Although the decision was unanimous, President Lagarde noted that there were some governors who asked themselves whether we should consider a hike in interest rates. 

As the ECB held their meeting, crude oil prices once again hit the $100p/bl mark for the first time since March this year after Iranian backed Houthi militia claimed responsibility for attacking two Saudi Arabian tankers in the Red Sea, which will create further disruption in the supply of crude oil. President Lagarde has referred to the Houthi attack as an alarming warning that inflation projections could be higher than expected, but pointed out that the ECB was well positioned to navigate the uncertainty caused by the present conflict.

President Lagarde also pointed out that the central bank has yet to see signs of second-round inflation effects*. Indeed, the President added that if the bank were only concerned about second-round effects, the ECB would have today hiked interest rates, and she was quoted as saying, “ we are not at that stage where we’re seeing those emergent signs of second-round effects”. Experts suggest that the September meeting is considered the natural point to deliver a rate increase as there will be more economic data, including inflation for two months and various business surveys.

*Second Round Effects – In these scenarios, second round effects are price and wage-settings stemming from the current shock that have the potential to raise Eurozone inflation beyond the near-term in a persistent manner.

Indeed, analysts advise that the swaps market implies that a 25 basis points increase in interest rates is a near certainty with financial markets fully pricing in a further increase in interest rates in December. Lagarde finished by noting that “the full effects of the energy shock have yet to play out, however energy price inflation had declined in June that it had risen since the start of the conflict and its impact on food, goods, and services is likely to keep inflation well above target into 2027”.

What’s Behind the Weakness in the Japanese Yen?

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The weakness in the Japanese yen has recently become a growing concern for the country’s financial officials and policymakers, as the currency has been responsible for driving up the cost of living for households and driving up import prices. Indeed, as of April this year, the Yen slid to its lowest level against the US Dollar since July 2024, and in order to prop up the currency, financial authorities spent a record amount for a one month period of US$ 74 billion — which in turn was a catalyst for a sharp rebound.

By late April, however, the Yen’s rebound proved short-lived, and renewed weakness pushed the currency to its lowest level against the US dollar since 1986. This plunge exposed the limits of intervention without a significant shift in monetary policy from the Japanese government and the Bank of Japan (BOJ). Currency traders are worried that the Ministry of Finance might delve deeper into the country’s foreign exchange reserves (data shows this figure to be  USD 1.09 trillion as of 31st May this year) as the Minister of Finance Satsuki Katayama was noted as saying, “authorities will take the appropriate and bold action at any time should the need arise”.

Experts advise that there are a number of reasons behind the weakness of the Yen, and the one that stands out the most is the difference between Japan’s extremely low interest rate and higher interest rates in the United States, the United Kingdom and other advanced economies. The inevitable outcome has been investors borrowing an exceedingly cheap Yen and then investing in higher yielding assets in many overseas economies, which translates into capital outflows from the Japanese economy, thereby putting downward pressure on the Japanese Yen. It should be noted that last month, the BOJ did in fact raise its interest rate by 25 basis points to 1.00%, the highest in 31 years, but analysts have been quick to point out that by international standards the Benchmark interest rate still remains low. 

Analysts also highlight Japan’s national debt, which stands at over 200% of GDP—the highest among G7 nations and major economies. This heavy debt burden, combined with an ongoing deficit, has fueled investor concern over the government’s fiscal discipline and continued overspending, ultimately eroding confidence in Japanese assets and the yen. Another problem for the Japanese Yen  and the economy is the US/Iran/Israel conflict currently raging in the Middle East. Data shows that Japan currently imports more than 95% of its oil requirements from the Middle East, meaning the country is exposed to disruptions in the Strait of Hormuz**. Japan pays in US dollars for their oil, and an increase in the price of crude means an increase in demand for the US Dollar at the expense of the Yen.

*Group of Seven / G7 – This is an informal political forum for the leaders of seven advanced democratic economies being Canada, France, Germany, Italy, Japan, United Kingdom and the United States. Originally it was known as the G8 until Russia was suspended in 2014 for the annexation of Crimea. The group meets annually to discuss and coordinate policy on major global issues such as economic governance, international security and climate change. The leader of the European Union (currently Ursula von der Leyen) has an unofficial seat at the table, enjoys all the privileges and is often dubbed the 8th member.

**Strait of Hormuz – A strategically vital narrow waterway connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea. It serves as the world’s most critical chokepoint with roughly 25% – 30% of global crude oil supplies and 20% of global LNG (Liquified Natural Gas) supplies passing through its waters.

There are a number of options open to the government to support the Yen, the first being intervention in the form of the BOJ buying the Yen and using foreign currency reserves, the second being to raise interest rates again by tightening monetary policy, narrowing the differential in interest rates between Japan and the US, thereby making assets denominated in Yen more attractive. Over the longer term, fiscal reform such as reducing the oversized and still growing national debt and curbing government spending would, analysts suggest, increase investor confidence in the country’s public finances and improve the appeal of assets denominated in Japanese Yen.

Demand Increasing for Green Energy Due to the Current Middle East Conflict

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It is a well-documented fact that for the past number of decades, many governments across the globe (except perhaps the US where President Trump has cancelled many green energy initiatives in favour of fossil fuels), have been actively moving away from fossil fuel dependency to alternative energy supplies. Experts suggest that the supply shock from the US/Iran/Israel conflict will be a major catalyst for governments to increase the transition to alternative energy. Analysts reference the response by European governments to the invasion of Ukraine by Russia on 24th February 2022 and the subsequent energy crisis threatening energy security, which made it imperative to focus on building a more diversified domestic energy supply.

Many governments across the globe have been investing for years in wind farms, electric vehicles, battery storage and solar panels with the primary goal of reducing carbon emissions. However, in today’s world, the current Middle East Conflict and the Ukraine/Russia war alongside the subsequent energy supply shocks, have moved geopolitical risk to front and centre for the race to alternative energy supply. Wind and solar resources hold advantages over fossil fuels, for example their resources are domestic and supplies cannot be restricted by war in foreign jurisdictions including geopolitical choke points (e.g., the Strait of Hormuz*). 

*The Strait of Hormuz — A narrow waterway at the entrance to and exit from the Persian Gulf — is a linchpin of global energy and freight flows. Traditionally, about 20% to 30% of the world’s total daily petroleum liquids (oil, condensate and products) and circa 20% of  global LNG (liquified Natural Gas) are shipped via the Strait. Furthermore,  data reveals that around one-third of the world’s seaborne fertilizer trade flows through the Strait, including circa 30% of global urea and circa 20% of global ammonia supplies. 

Recent International Energy Agency (IEA) projections show global energy investment reaching $3.4 trillion this year. Of that total, $2.2 trillion will go toward clean energy and grid infrastructure, while $1.2 trillion will fund traditional fossil fuels (oil, gas, and coal). Investment in oil is expected to decline for the third year from 2023 with investment falling below $ 500 billion, whilst LNG investment is expected to rise to $ 330 billion, however this figure may be inaccurate to LNG terminals and fields in Qatar suffering damage as a result of the US/Iran conflict.

Experts conclude that the current Middle East crisis has encouraged policymakers across the globe to shift the emphasis to system flexibility and energy security, which in turn will support increased investment from fossil fuels to alternative energy. In Europe for example, the European Commission on 22nd April this year published Accelerate EU which refers to the need to strengthen energy resilience. In the report, they said that whilst transition to alternative energy is by no means new, it needs to be accelerated allowing the EU (European Union) to rely less and less on imported fossil fuels, thereby shielding economies within the bloc from rising energy costs. 

In Southeast Asia, the need for energy transition is more acute as circa 80% of crude oil flowing through the Strait of Hormuz is bound for Asian markets, prompting governments in the area to make energy security a core priority. Facing some of the highest residential electricity rates in Southeast Asia, the Philippines is rapidly turning to solar power. It recently surpassed Pakistan as the second-largest buyer of Chinese solar panels, with imports from China more than doubling between January and May compared to the same period in 2025. Elsewhere, auto dealers throughout the region advised that there had been increased consumer interest in EVs (electric vehicles), with exports from China jumping by 64% to Vietnam, 70% to Thailand, and 95% to the Philippines. Overall, Chinese EV exports were 57% higher in the first three months since the start of the Middle East crisis (March through May 2026) than for the same period in 2025.

The global airline industry announced in June 2026 a near halving of its 2026 profit forecast, placing the blame squarely on the current Middle East crisis for disrupting key air corridors and driving up fuel costs, which due to thin margins in the airline industry has exposed the fragility of the sector. Data reveals that jet fuel costs account for circa 33% of airline costs, and when prices are elevated, it can impact the financial health of a number of carriers. Jet fuel prices have recently stabilised, however the recent failure of the US/Iran ceasefire pact and the subsequent re-engagement of hostilities has led to analysts suggesting that some smaller airlines may not generate enough cash flow during the peak summer months to survive the coming winter.

Rising living costs continue to strain households worldwide, leading a growing number of governments—mostly in private, but some publicly—to condemn President Trump for initiating the war with Iran. Military experts warn that without ground troops or escalated mass bombing (which would cause an unacceptable level of civilian casualties), the conflict will likely become a drawn-out war of attrition. Many lower income households across the world are now struggling with paying their bills as fuel, food and transport prices increase. 

A number of analysts have suggested that the world will not see the energy spikes as seen before the ceasefire accord, as OPEC+ and the UAE have vowed to increase oil exports plus the Saudi Arabian pipeline (The Petroline which avoids the Strait of Hormuz and is pumping at full capacity) should hopefully keep prices below the $100 per barrel mark. However, several experts challenge this view. While they agree that Brent crude could average around $85 per barrel by Q4, they warn that escalating hostilities between the US, Iran, and Israel—combined with ongoing disruptions in the Strait of Hormuz—could push prices past $120 per barrel by the fourth quarter.

Today, the Benchmark Brent crude oil price is trading around the $90pbl mark with WTI (West Texan Intermediate) trading at circa $83.70pbl. This marks a notable surge in prices driven by the United States and Israel re-engaging in hostilities with Iran. The world will have to wait and see if oil exceeds $100 a barrel. Still, ongoing Houthi threats against Saudi Arabian crude passing through the Bab al-Mandab Strait, a vital choke point at the southern end of the Red Sea, could easily drive prices past that level.

Oil Prices Rise as the United States and Iran Escalate the Middle East Conflict

Written by IntaCapital Swiss on . Posted in Iran, News & Reports. Leave a Comment

The peace accord between the United States and Iran which was remotely signed on June 17th, 2026, has now completely collapsed with both protagonists increasing hostilities, and the Strait of Hormuz is once again closed to all traffic. The US has also blockaded Iranian oil exports, having a negative effect on oil prices with the benchmark brent crude now trading at $84.20 – $85.20p/bl (per barrel), an increase of circa 18% – 20%, and WTI (West Texan Intermediate) trading at circa $80.34p/bl, an increase of circa 13% – 15%.

Iranian officials have subsequently announced that “Regional energy exports are either shared by all or denied by all”. Furthermore, experts in this arena have observed that the IRGC (Islamic Revolutionary Guards Corps) may well employ their Houthi partners/allies located in Yemen to close the Bab el-Mandeb gateway* to the Red Sea, putting that energy artery at risk as well as the currently shut Strait of Hormuz. The US military may well find themselves to be soon fighting on two fronts. 

*Bab el-Mandeb gateway – Often translated from Arabic as the “Gate of Tears” or the “Gate of Grief”, possibly an apt description considering the current state of affairs in the Middle East. It is located between the Horn of Africa and the Arabian Peninsula, and is one of the world’s most critical maritime chokepoints. Historically, the gateway has handled circa 10% – 12% of all global trade and acts as a primary artery for energy transportation between Asia, the Middle East and Europe. Analysts advise that millions of barrels of petroleum products transit the gateway daily and its closure will have a direct effect on the global economy.

Analysts have noted that once the peace was signed, exports from the Persian Gulf recovered to just over 80% of pre-conflict levels, (Iranian crude exports were estimated in the region of 1.5 million – 2 million bpd – barrels per day), but last week, it had declined to under 50% or approx 11 million bpd. Furthermore, analysts noted that if the Strait of Hormuz remains closed, benchmark brent crude could be above the $110pbl come Q4 this year, and could be even higher if Houthi’s are successful in disrupting shipping in the Bab el-Mandeb gateway.

Experts suggest that once again, global inflation will be negatively impacted leading to further rises in the cost of living including fuels at the pumps, foodstuffs and airline prices. Indeed, once the Strait of Hormuz reopened data shows that oil prices plunged leading to an easing of inflation in such countries as the United States, China, Germany, France, Italy and Brazil. What happens next is dependent on the two protagonists, but it seems that neither side is prepared to budge with Iran not prepared to give up their nuclear programme including their uranium enrichment— which is a key component of nuclear weapons.

Experts suggest that there is no way Iran will allow a free passage through the Strait of Hormuz and will accordingly charge tariffs. Iran currently holds the upper-hand in the Strait, and some independent military experts are saying that short of the United States conducting an all-out war with Iran, this stalemate will continue until President Trump declares victory. Experts note that even if he secures a victory, it is likely to be pyrrhic—a win achieved at such a high cost that it ultimately feels like a defeat. Analysts argue that regardless of how events unfold between now and November, the fallout will likely cost him the mid-term elections, with some news outlets already labeling the conflict ‘Trump’s Vietnam’.

Energy Prices Rise as USA/Iran 60-Day Ceasefire Agreement Collapses

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Last Friday (July 10th), President Donald Trump announced that the 60-day ceasefire negotiated with Iran was over, having previously called their leadership ‘scum’ and ‘cuckoo’ as a result of an escalation in hostilities over the past week. The escalation which began last week, was originally blamed on Iran for targeting commercial traffic in the Strait of Hormuz, and indeed, hostilities continued to escalate over the weekend and up until recently, with the Iranian leadership announcing that the Strait of Hormuz was now closed.

Despite protests from President Trump persisting the Strait was still open, recently released ship tracking data has shown that no commercial shipping has crossed the Strait of Hormuz since a few days ago. Iran and the United States continue to exchange blows with Iran hitting targets in Jordan, Kuwait, Oman and Qatar in response to strikes by the US military forces. Last Tuesday (July 7th), the USA revoked the licence authorising the sale of Iranian crude, and the Iranian foreign ministry announced that the USA had “rendered futile all efforts of the past few months to reduce tension and establish peace in the West Asian region”. 

In response to the breakdown of the peace accord, crude oil prices have shot up recently. Brent crude, the global benchmark, rose over 4.00% to $78.82 per barrel for September delivery—its highest level since June 22nd. While oil prices had nearly returned to pre-conflict levels when the peace accord was signed on June 17th, this surge leaves them 9.00% below where they stood before the conflict began.

Experts suggest that the previous spike, where crude oil hit a high of $126.31, is unlikely to be seen again. While the current risk premium should keep prices supported, an increase in output from Abu Dhabi and the OPEC+ output quota expansion will continue to add barrels to an outlook leaning towards oversupply. Indeed, the Emirate boosted crude oil production to an all-time high last month, pumping an average of four million barrels per day. However, analysts believe the long-term outlook for oil prices will depend on whether or not peace can be found in the Persian Gulf, but currently, it seems Iran and the US will continue to escalate the conflict. 

Elsewhere, gold and silver declined, as the latest outbreak of hostilities raised inflation fears and the possibility of rate hikes by the federal reserve to combat an already stubborn inflation figure. Indeed, gold has dropped circa 1.13% with the price now down by circa 2.00% from a recent high of about $2,400. Experts advise that part of the problem for gold is the fall-out from the Middle East conflict, which has produced an inflationary environment where interest rates remain stubbornly elevated, as do bond yields thus making the opportunity cost of holding gold somewhat high.

In the longer-term, experts advise that if the conflict in the Persian Gulf continues and the Strait of Hormuz remains shut, and Iran continues to strike at key crude oil and LNG export infrastructure, prices could once again spike beyond the $100 p/bl mark. However, the current conflict has pushed many countries to accelerate their transition towards renewable energies. Additionally, a further effort by major energy firms to build more pipeline capacity should cover much of the Persian Gulf exports by 2028.

Crude Oil Shipments Increasing From The Persian Gulf

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Crude oil flows through the Strait of Hormuz are rapidly rebounding as Persian Gulf exporters ramp up production with Kuwait leading the way followed by Saudi Arabia and Iraq also boosting output as shipping restrictions have become more relaxed. As the blockading of the Strait of Hormuz is easing trapped tankers have exited the Persian Gulf via the passage and loading operations have resumed at major hubs such as Saudi Arabia’s Ras Tanura terminal. Indeed, data reveals that oil output last month was the lowest from OPEC and OPEC+* since the year 2000, and also below levels during the 2020 Covid-19 pandemic when demand collapsed.

OPEC (Organisation of the Petroleum Exporting Nations) and is a coalition of 23 oil producing countries of which the full members are Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of the Congo, Saudi Arabia, United Arab Emirates and Venezuela. There are a further 10 non-OPEC Partner Countries that form the OPEC+ and make up the DoC (Declaration of Cooperation) and consists of Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan. The whole group’s modus operandi is to cooperate to influence the global oil market and stabilise prices.

Yesterday, with both Saudi Arabia and Russia taking the lead, OPEC+ agreed via a video conference to add 188,000 bpd (barrels per day) to their current output target, and this is in keeping with their decision two years ago to reverse output curbs. In theory they have added 940,00 bpd (equivalent of 1% of global demand) since the war began but the closure of the Strait of Hormuz nullifies that figure, and since oil has started flowing through the Strait of Hormuz, figures released suggest it has helped to drive a surplus in Asian markets.

Over the years data shows that Asia is the biggest importer of Middle Eastern crude oil and analysts advise that Asian refineries are now well supplied to the extent that as supply ramps up from the Persian Gulf these Asian refiners are pushing some oil supplies to distant destinations such as California in the United States. Indeed, Ex UAE grades are now being offered to the West Coast of the United States and if contracts are agreed it will be the first time since 2018 that oil from the Middle East has arrived at these destinations.

In the commodities market, oil futures have fallen drastically from their peak of $126.31 during the current United States/Iran/Israel conflict to circa $72per/bl. Analysts advise that tanker tracking data shows that since the Strait of Hormuz has reopened due to the current peace accord, both the UAE and Saudi Arabia have restored shipments/exports to near pre-conflict levels. Experts advise that oil flows via the Strait of Hormuz have recovered to circa 10 million bpd but still well below the pre-war average of 18 – 19 million bpd.

The clock is ticking on the Islamabad Memorandum of Understanding; a 14 point preliminary peace agreement signed on 17th June 2026 establishing a 60 day ceasefire after 109 days of hostilities. The deal is under severe strain at the moment despite the usual positive rhetoric emanating from the White House as outbreaks of fighting and continued disagreement on the nuclear front regarding Iranian enrichment. It is hoped that the accord will soon grow into a fully signed peace agreement and the world will hold its breath as it really cannot afford another energy shock so soon after the last one.

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