T&T’s Trade Balance Gets Support from Soaring Energy Prices

• Trinidad and Tobago's (T&T’s) exports and overall trade profile are poised to benefit significantly from the surge in global energy prices since the onset of the United States (U.S.)-Iran conflict, with the current account surplus set to widen substantially from 4.7% of GDP in 2025 to 6.5% in 2026.
• Following 2025, which saw energy exports rise, more than offsetting a decline in non-energy exports, BMI expects T&T’s trade position to strengthen further in 2026. This will be driven primarily by surging energy exports, which accounted for 83.3% of total exports in 2025, positioning the country to benefit enormously from recent energy market developments. BMI also notes, however, that T&T’s primary income deficit will widen in 2026, as surging profits generated by foreign oil companies are repatriated, offsetting some of the overall boost to the current account. This mirrors historical trends, seen recently when oil prices rose in 2022.
• The expectation of increased energy exports in 2026 is based on two supporting factors: strongly favourable terms-of-trade support from the U.S.-Iran conflict and elevated energy prices, alongside the expectation that hydrocarbon production will rise in 2026 as newly operational fields ramp up output.
• Notably, BP's Cypre field, which opened in April 2025 and completed its seven-well drilling programme in December 2025, will support output gains. Q1 2026 LNG production data show a year-over-year output expansion in volume terms, and combined with supportive prices, this will help propel exports through the year as the conflict shows few signs of near-term abatement. Indeed, T&T’s trade profile is strongly correlated with energy prices, with a 1.0% increase in the Brent crude price associated with a 0.52% increase in goods exports in the current quarter and a 0.30% increase in the quarter ahead.
• Additionally, this development will have well-timed benefits for T&T’s external buffers. Strong earnings and soaring prices will help provide support for the country's currency regime and reserve position. Furthermore, expectations are that the Central Bank of Trinidad and Tobago will welcome this development, especially given that declining reserve levels may otherwise necessitate a rise in the policy rate to counter capital outflows – a negative development given soft domestic demand. In the near term, these pressures will be muted by the supportive external environment that will support reserves accumulation, which has risen in recent months.
• That said, risks to the outlook are heightened but balanced, driven primarily by uncertainty surrounding ongoing Middle East geopolitical strife. Should oil prices remain higher for longer than expected, T&T’s current account surplus and trade balance could outperform the forecast. Conversely, a quicker resolution to the conflict would represent a downside risk, as energy prices would likely fall back more rapidly than currently anticipated, weighing on the trade balance and buffers.

(Source: BMI, A Fitch Solutions Company)