Credit Insurance, Featured, Market Study

1. Market Context

In 2026, the primary agricultural commodities market is experiencing a period of progressive normalization following several years of high volatility. Prices are stabilizing at levels significantly lower than recent peaks, supported by globally abundant harvests and a replenishment of global stocks.

The grains (wheat, corn, barley, rice) and oilseeds (soybeans, rapeseed) markets are currently characterized by comfortable supply levels. This is keeping prices within a relatively narrow range and exerting downward pressure on market rates. Sunflower seeds remain a relative exception: heterogeneous production conditions in parts of Eastern Europe are causing occasional local tensions and price premiums.

In the pulses segment (peas, lentils), the significant increase in harvested volumes over the last two campaigns has generated high inventory levels, mechanically weighing on prices.

Soft commodities show more divergent dynamics:

◆ Ample supply is helping moderate prices for coffee and tea;

◆ Cocoa remains highly exposed to climatic and phytosanitary hazards;

◆ Sugar and cotton remain sensitive to acreage variations, weather conditions, and input costs, particularly energy.


2. Key Sector Risks

Despite a generally more stable environment, several structural risk factors remain capable of triggering rapid market reversals.

Climate Risk Weather remains the primary factor for potential volatility. A climate shock in a major producing region could quickly unbalance a market that currently appears to be in surplus. The increased frequency of extreme weather events—droughts, floods, or heatwaves—increases the probability of simultaneous disruptions across multiple production hubs.

Geopolitical and Trade Risks Uncertainties surrounding international trade agreements, notably in North America and Asia, represent a potential source of instability. Furthermore, tensions in strategic maritime zones can disrupt global logistical routes, increasing transport costs and extending delivery lead times. Long-haul flows, particularly grain and oilseed shipments between the Americas, Europe, and Asia, are the most exposed to these disruptions.

Input Costs Even as some pressures ease, volatility in energy costs, ocean freight, and fertilizers remains significant. These elements directly influence the cost structure for producers and traders and can rapidly alter the profitability of trade flows.

Currency Risk As the majority of agricultural commodity transactions are denominated in US Dollars, USD fluctuations are a key factor. A strengthening dollar can reduce the purchasing power of certain importing countries and lead to rapid adjustments in trade flows.

3. Financial Implication for Operators

In this environment, several financial factors require particular vigilance.

Inventory Management In a downward-trending price environment, high inventory levels can generate depreciation risks and squeeze operators’ margins.

Counterparty Risk Trade receivables must be subject to enhanced monitoring. Longer logistical delays can lead to an increase in DSO (Days Sales Outstanding) and heighten the risk of default, particularly in certain export regions.

Working Capital Requirement (WCR) WCR remains a central challenge for traders. The duration of physical flows, freight costs, insurance premiums, and the availability of containers and vessels directly impact cash flow pressure.

Hedging Management Even as volatility subsides, managing hedging positions remains essential. Daily monitoring of mark-to-market and margin calls is necessary to avoid liquidity strain.

4. Outlook and Risk Positioning

The outlook for 2026–2027 remains generally positive. Global demand is expected to continue growing, driven particularly by middle-income countries, which support the structural increase in agricultural consumption.

In this context, prices are expected to remain relatively contained, though still exposed to occasional episodes of volatility linked to weather conditions or geopolitical adjustments.

In this regard, the current crisis in the Middle East is significantly disrupting maritime routes and driving up the cost of energy and agricultural inputs. This creates immediate pressure on the cost and availability of fertilizers and agricultural goods. This situation increases market volatility and deteriorates risk quality for both buyers and producers, especially in import-dependent regions.

Cartan Trade thus maintains a favorable risk appetite for the agricultural sector, given:
◆The structural resilience of the value chains;

◆The depth of the markets;

◆The overall quality of the operators.

This appetite is accompanied by reinforced discipline in risk management, notably through:
◆Rigorous monitoring of balance sheets;

◆Liquidity control;

◆Analysis of hedging policies;

◆Monitoring of logistical risks.

This approach aims to capture the opportunities offered by the sector while preserving portfolio quality and the overall risk balance.

Credit Insurance, Featured, Market Study

The global oil market remains strategic for the real economy and for credit insurers’ portfolios, due to price volatility, potential defaults among intermediary players, and persistent geopolitical and financial risks. As 2026 approaches, the sector’s dynamics combine still-resilient demand, structural underinvestment in upstream activities, and an energy transition that is reshaping value chains.

1. Recent Market Developements

Since 2022, oil prices have fluctuated within a wide range, driven by supply shocks (sanctions on Russia, OPEC+ quotas, regional disruptions) and demand uncertainties (China, Europe). This volatility increases cash flow stress for independent refiners, distributors, traders, and SMEs in the oilfield services sector, whose margins are highly sensitive to sharp price swings and working capital financing requirements.

The relative stabilization observed in 2025 does not eliminate risk. The sector continues to face chronic underinvestment in exploration and production, which may lead to supply tightness phases and higher prices, while simultaneously making it more difficult for certain players to finance their transition or sustain productivity levels. This calls for heightened vigilance toward highly leveraged companies or those dependent on a single production basin.

2.Key Players and Risk Exposure

OPEC+

Mohammed bin Salman’s Saudi Arabia and Russia steer production quotas and influence global liquidity conditions. Sudden policy decisions may affect the solvency of refineries and distributors, particularly in emerging markets. Exposure to counterparties located in unstable jurisdictions should remain limited.

United States – Shale Producers

Growth among U.S. shale producers is constrained by regulatory and financial pressures. Ongoing consolidation entails risks related to:

◆ Rapid mergers and acquisitions,

◆ Still-fragile balance sheets among small and mid-sized producers.

Historically highly cyclical, these actors require quarterly financial monitoring to anticipate potential production declines or cash flow deterioration.

China and India – Demand Drivers
Demand from China and India directly impacts the health of global traders and logistics operators. A slowdown in China would likely increase default risks among petrochemical SMEs and import-export companies.

Oil Majors

Major oil companies present relatively low risk thanks to:

◆ Geographic diversification,
◆ Stronger balance sheets,
◆ Integration across more stable downstream segments (refined products, chemicals).
However, certain European majors such as Shell and BP are rebalancing their strategies and may reduce exposure to conventional oil, which could impact their subcontractors.

3. Defaults, Vulnerabilities, and Sector Risks

Supply Chain Risk

The oil industry depends on highly interconnected players: producers, transporters, refiners, wholesalers, and logistics operators. A disruption (sabotage, embargo, maritime attack) can trigger cascading defaults, particularly among undercapitalized companies.

Liquidity Risk

Traders and distributors face massive cash requirements. During periods of rapid price increases, financing needs surge; during price declines, inventories lose value. Such situations can lead to sudden failures, even among historically solid players.

Upstream Underinvestment

Underinvestment creates an environment of rising production costs, weakening smaller oil companies. Key watchpoints include:

◆ Debt levels,
◆ Refinancing capacity,
◆ Extraction and maintenance costs.

Energy Transition

Climate policies create stranded asset risk, especially for companies exposed to high-carbon reserves. Regulatory pressure may also restrict access to bank financing.

4. Key Watchpoints for 2026

◆ Extreme Volatile and Diverging Price Scenarios
 ➞ Likely increase in claims within international trading and among undercapitalized distributors.

◆ Rising Geopolitical Risk
➞ Red Sea, Strait of Hormuz, Iran–Saudi tensions: a logistical shock could rapidly trigger defaults among import-dependent players.

◆ Tighter Bank Credit Conditions
➞ Banks are reducing exposure to hydrocarbons, shifting greater risk toward credit insurers.

◆ Fragility of Oilfield Service SMEs
➞ Margin pressure, cost inflation, and increasing payment delays.

◆ Sector Concentration
➞ Large companies are becoming more resilient, while smaller firms are disappearing or remaining structurally vulnerable.

How Does Credit Insurance Protect Companies in the Oil Sector?

Absorbing the Effects of Volatility

Credit insurance mitigates the impact of volatility by protecting companies against sudden defaults triggered by external shocks that are neither foreseeable nor controllable. In the oil market, a rapid price correction or geopolitical escalation can turn a previously reliable counterparty into a defaulter within weeks.
Without credit insurance, such a reversal directly hits the supplier’s balance sheet. With credit insurance in place, the financial impact is transferred and contained, preserving liquidity and protecting margins.

Addressing Liquidity-Driven Failures

In the oil industry, bankruptcies rarely stem from a lack of activity. More often, they result from exploding cash requirements (cargo financing, margin calls), sudden withdrawal of bank facilities, or inventory devaluation following a price drop.

Credit insurance secures receivables in an environment where even operationally active companies can become insolvent due to funding shortages. It covers a structural cash-flow risk that is intrinsic to commodity trading and energy distribution.

Protecting Against Cascading Defaults in a Highly Interconnected Sector

The oil ecosystem is tightly interconnected: producer → transporter → trader → distributor → subcontractor. A supply disruption, sanction, or logistical bottleneck — particularly in high-risk corridors such as the Red Sea or the Strait of Hormuz — can trigger rapid chain reactions across the value chain.

Credit insurance acts as a financial firewall in an industry where defaults can be systemic and propagate quickly. It prevents an external shock from escalating into an internal liquidity crisis.

Compensating for Bank De-Risking

Banks are steadily reducing their exposure to hydrocarbons due to ESG constraints, capital requirements, and regulatory pressures. The consequence is a greater share of risk being borne directly by suppliers and commercial counterparties.

Credit insurance effectively substitutes part of the traditional banking safety net by securing trade receivables in a context where credit lines are shrinking. It becomes a tool for business continuity, enabling companies to maintain commercial flows despite tighter financing conditions.