Brent crude prices have surged over 50%, year-on-year, in the second quarter of 2026. While this sharp increase has a range of implications for the European investment grade (IG) corporate landscape, oil prices are not the only driver of margins, let alone credit profiles. As this month’s chart shows, our analysis suggests that the European IG corporate sector is well positioned to absorb the impact, though some sector dispersion is likely.
The chart highlights our expectations for earnings before interest, tax, depreciation and amortisation (EBITDA) across different sectors, including the impact of higher oil prices. We forecast the median EBITDA for European IG corporates to increase by 5% over the next 12 months, compared with the prior 12-month period. Even in an illustrative downside scenario scenario, where Brent crude rises to $150 per barrel for the remainder of the year, the impact on credit profiles appears manageable in most cases, although outcomes will vary by sector and issuer. The challenge for corporates is to balance cost with price increases, at the risk of losing market share.
The energy sector is clearly the biggest beneficiary of higher oil prices, while chemicals, building materials, airlines and autos are among the sectors that will face the most significant headwinds. For chemicals, higher energy feedstock costs for longer would likely pressure already slim margins and risk demand destruction, while lower imports from Asia could provide some temporary pricing relief.
In building materials, high energy intensity is being mitigated by an increased use of alternative fuels, a strong pricing track record, and demand tailwinds from public infrastructure spending, reshoring and data sector build-out. For airlines, pricing power is constrained due to a highly competitive market and, although there is some near-term protection from fuel hedging, this insulation falls off later in 2026. Autos are facing a muted consumer environment, making price increases more difficult. Demand for autos has a low direct correlation with higher oil prices, but there is also some shift towards electric vehicles and plug-in hybrids. Other sectors, such as telecoms, media, consumer, and food & beverage are likely to see a limited direct impact, providing consumer confidence remains resilient.
Overall, our credit views for European corporates are underpinned by companies’ strong balance sheet discipline, solid liquidity positions and stable leverage profiles. This month’s chart underscores the importance of sector selection and risk assessment in the current environment. In our view, ivestors should focus on identifying companies with strong pricing power, effective hedging strategies and robust balance sheets to navigate ongoing volatility.