The November 2026 Update on Energy, Trade and Policy, and What It Means for 2027 Plans

The shift and why it matters now

Four developments from October and the first days of November change the assumptions behind 2027 operating and capital plans. Oil flows through the Strait of Hormuz remain constrained. US tariff policy now moves one product category at a time. A series of trade and supply deadlines falls between now and January. Control of the US Congress changes in January 2027.

Energy. Oil supply through the Strait of Hormuz remains below its pre-conflict level. The US Energy Information Administration's October Short-Term Energy Outlook states: "We forecast the Brent crude oil spot price will average $105 per barrel (b) in 4Q26." The same outlook assumes that oil flows from the Middle East remain constrained through the fourth quarter. Prices fell in the first days of November as talks on reopening the Strait proceeded; Brent fell 5.9 percent in a single session on November 2. The next outlook is published November 10. The planning fact is the range, not the point: a 2027 budget built on one oil price will be wrong within weeks.

Trade. The legal basis of US tariffs changed during the year. After the Supreme Court held in February that tariffs imposed under the International Emergency Economic Powers Act were unlawful, refunds of those duties began, and Section 301 tariffs of 10 or 12.5 percent on imports from 60 economies took effect in July. Since September, new actions have come under Section 232, one product category at a time: a 100 percent duty on patented pharmaceuticals in effect from September 29; negotiations rather than immediate tariffs for robotics, industrial machinery and wind turbines; and a 15 percent duty on polysilicon and derivative products from December 4. Each action changes the cost of specific bills of material, not the average tariff rate.

North America and critical minerals. The United States did not renew the USMCA in July, which places the agreement under annual review through 2036. Written comments for the 2027 joint review are due January 12, 2027. China's suspension of its expanded rare earth export controls expires November 10, 2026, and no extension had been announced as of November 4.

US policy. The November 3 elections change control of both chambers of Congress in January 2027, based on race calls reported on November 4. The business effects to plan for are specific: congressional hearings on the administration of tariff refunds, proposals for tighter export controls on technology, and closer review of cross-border transactions in regulated industries. Tariff authority under Sections 232 and 301 stays with the executive branch, so tariff schedules are unlikely to change through legislation in the near term. Federal funding runs through December 11.

Domestic costs move in the same direction. Consumer prices rose 3.7 percent in the 12 months to September. The Federal Reserve held its policy rate at 3.75 to 4 percent on October 28, with two members voting for an increase. Manufacturers report prices paid for materials still rising at a fast pace.

Effects across the business

First-order effects arrive within weeks. Energy, freight and war-risk insurance reach landed cost. Duty cost changes by product and country of origin. Materials such as rare earth magnets, specialty chemicals and petrochemical feedstocks become harder to secure on normal lead times.

Second-order effects arrive within a quarter. Suppliers pass costs through and allocate scarce materials to their largest customers. Customers in energy-importing markets reduce volumes. Working capital rises as companies hold safety stock. Fixed-price contracts lose margin when material costs move and the contract does not.

Third-order effects reach the capital plan. Site selection now weighs energy security and trade access alongside labor and tax. The cost of capital stays higher while inflation remains elevated. Competitive position moves toward companies that serve each region from within the region and hold diversified energy supply.

What leading companies are doing

Leading companies plan on ranges with defined decision points. They agree in advance which oil price, duty change or supplier event moves pricing, inventory or sourcing, and who approves the move.

They qualify second sources for materials that come from one country and hold strategic inventory of critical minerals and long-lead components. Where duties and lead times justify the cost, they serve each region from within the region. Chief executives have reordered their priorities: in KPMG's 2026 US CEO Outlook, "78% said regionalization (nearshoring/friend-shoring) has become more important than cost optimization in supply chain decisions."

They treat energy as a contract and site-selection issue: long-term power and fuel contracts, and customer pricing indexed to energy and freight costs.

They run a standing geopolitical monitoring function with a named executive owner, tied to the planning calendar, so events reach decisions in days. They use public comment processes, such as the USMCA review, to put operating facts on the record.

Three cases for 2027 planning

Constrained supply. Flows through the Strait of Hormuz stay below pre-conflict levels into 2027, product-level duties continue to expand and critical mineral supply tightens after November 10. Energy, freight and material costs stay high. The priority is margin protection: index-linked pricing, cost pass-through clauses, and inventory of critical materials sized for long lead times.

Partial normalization. Flows recover gradually, oil prices ease through 2027 and the tariff structure stabilizes at current levels. Costs fall slowly and unevenly by material. The priority is to recover margin without losing volume, and to decide which emergency measures, such as safety stock and premium freight, to unwind and when.

Rapid reopening. Talks reopen the Strait, prices fall quickly and trade actions shift to negotiated agreements. Customers expect price reductions within a quarter. The priority is to reset pricing, release working capital from safety stock and redeploy capital to growth investments held back during the disruption.

Each case needs its own pricing, inventory, sourcing and capital actions, agreed in advance with a named owner. The decision point that moves the company from one case to the next is a fact the company monitors weekly: the oil price, a duty change, a supplier allocation notice or a policy decision.

Actions for the CEO

1. Plan 2027 energy at a range. Build the budget at a low and a high oil price, with the actions that follow each case agreed now.

2. Rebuild the duty plan by product and origin. Include refund recovery status, current Section 232 exposure and the pending product reviews, with the effect on margin by product line.

3. Secure critical materials prior to the next deadline. Identify every material exposed to the November 10 rare earth expiry and to single-country supply, and confirm inventory and second-source status for each.

4. Prepare for the new Congress. Map exposure to export controls, cross-border transaction review and the tariff refund process, brief the board and prepare to engage new committee leadership in January.

5. Put North American operations on the record. Companies with plants, suppliers or customers in Mexico and Canada submit USMCA comments by January 12, 2027.

Questions for the leadership team and the board

What oil price does the 2027 budget assume, and what happens to margin at $20 a barrel above and below it?

Which products carry Section 232 or Section 301 exposure, and has pricing caught up with the duty?

Which materials come from one country, and how many weeks of supply do we hold?

Who owns the company's view of geopolitical developments, and how fast does it reach the operating plan?

What does the change in Congress mean for our export licenses, cross-border transactions and refund claims?