Publication Date: 3 March 2026 | Reporting Period: 3 February – 2 March 2026
Monthly Briefing
- Operation Epic Fury launched February 28; US-Israel strikes kill Iran’s Supreme Leader.
- Oman-mediated nuclear talks collapse after months of cautious progress.
- Bank of Jamaica cuts policy rate to 5.50% on February 24, just days before the war begins.
- Oil prices begin to surge from $72 per barrel as markets price in Hormuz disruption risk.
- Jamaica reconstruction progressing but entering a period of profound external uncertainty.
- Tourism sector targets full recovery by May; bookings tracking ahead of expectations.
The Four Days That Changed Everything
On 24 February 2026, the Bank of Jamaica cut its policy interest rate by 25 basis points to 5.50 per cent per annum — a carefully considered decision, made in the context of an improving inflation outlook and the continuing need to support economic recovery after Hurricane Melissa. Four days later, on the evening of 28 February, the United States and Israel launched Operation Epic Fury, a joint air and maritime campaign targeting Iranian command and control infrastructure, nuclear facilities, IRGC leadership and naval assets. The strikes killed Supreme Leader Ali Khamenei and several senior Iranian commanders. The world woke on 1 March 2026 to a geopolitical landscape that had been fundamentally, and perhaps permanently, altered overnight.
For the Bank of Jamaica’s Monetary Policy Committee, the timing was acutely uncomfortable. A rate cut calibrated to a world without a major Middle East war had taken effect just as the most significant conflict in the region since 2003 began. The central bank, like every institution managing an oil-importing economy, would spend the coming weeks reassessing assumptions that had been reasonable one week and obsolete the next.
The Road to War: Negotiations That Failed
The conflict did not emerge from nowhere. Since late 2025, the United States and Iran had been engaged in indirect nuclear negotiations mediated through Oman. Those talks had generated cautious optimism in diplomatic circles: an Iranian foreign ministry official had stated publicly in January that “significant progress” had been made and that Tehran was willing to make “meaningful concessions” on enrichment limits in exchange for sanctions relief. The international community, weary of years of nuclear standoff, had watched the Oman channel with fragile hope.
The hope proved misplaced. President Trump, characterising the Iranian offer as insufficient, stated publicly in February that he was “not thrilled” with the state of the talks. Israeli Prime Minister Netanyahu lobbied Washington intensively in the same period, presenting intelligence assessments — reportedly including satellite evidence and signals intercepts — of accelerated Iranian nuclear weapons development. On the eve of the strikes, the Omani foreign minister confirmed that talks had broken down. Operation Epic Fury followed within hours.
The decision to go to war rather than continue diplomacy was among the most consequential of the Trump administration’s second term, and its economic consequences were felt within hours on global markets. Brent crude, which had been trading near $72 per barrel on 27 February, surged as news of the strikes spread. Oil had not been trading over the weekend when the strikes launched; when markets opened on Monday 2 March, the reaction was immediate and severe.
Oil Markets React, Caribbean Braces
By 2 March — the first trading day after the strikes — Brent crude had surged 10–13 per cent to around $80–82 per barrel, with traders pricing in the risk that the Strait of Hormuz, through which approximately 20 per cent of the world’s traded oil flows, would be closed or severely disrupted by Iranian retaliation. Those fears were realised when Iran declared the Strait effectively closed on 4 March. By the end of the reporting period covered by this edition, Brent was already well above $90 and climbing. The full scale of the oil price surge — which would carry Brent to near $120 by mid-March — was already visible in forward curves and options markets.
For Jamaica and the Caribbean, the initial market reaction was enough to sound alarm bells. Finance ministries and central banks across the region began revising their import cost assumptions upward, assessing the pass-through implications for their consumer price indices, and reviewing the adequacy of foreign exchange reserves in the event of a sustained period of elevated oil prices. The Caribbean Development Bank issued a preliminary assessment noting that CARICOM member states, as net oil importers, would face “significant balance of payments pressure” if oil prices remained above $90 per barrel for an extended period.
Jamaica’s Reconstruction: Momentum Meets Uncertainty
Through most of February, Jamaica’s reconstruction from Hurricane Melissa had been gathering encouraging momentum. Approximately 80 per cent of the island’s hotel inventory was either fully operational or close to reopening. Tourism Minister Edmund Bartlett stated publicly that the sector was on track for full operational recovery by May 2026, a target that had seemed ambitious in the immediate aftermath of the October 2025 disaster. The IMF had formally approved its US$415 million disbursement to Jamaica on 16 January, providing important balance-of-payments support. The reconstruction of roads and drainage infrastructure was proceeding, with the Jamaica Defence Force and private contractors both heavily engaged across the affected parishes.
Tourism bookings had been tracking ahead of revised post-Melissa targets. Over one million visitors arrived in the first quarter of 2026, generating nearly US$1 billion in revenue — a performance that, given the scale of the October disaster, was genuinely remarkable. Diaspora remittances remained elevated, with inflows running 4.2 per cent ahead of the prior fiscal year on a cumulative basis, providing an important supplementary income stream for households still coping with the financial consequences of storm damage.
Into this cautiously positive picture, the Iran war arrived at the end of the month like an unwelcome second storm. The immediate concern was that every category of reconstruction cost — fuel, cement, steel, roofing materials, generator equipment — would now become more expensive. The medium-term concern was whether the surge in global uncertainty would dampen the foreign direct investment flows and development finance disbursements on which Jamaica’s reconstruction plan depended.
The Jamaican Housing Market Under Dual Pressure
The Bank of Jamaica’s rate cut to 5.50 per cent had been welcomed by the mortgage and housing finance market as a signal of easing borrowing conditions. Lenders had been competing more actively for creditworthy borrowers, with rates for strong applicants drifting toward the 8.5–10.5 per cent range, down from the 8.5–12.5 per cent range prevalent in 2025. The NHT and commercial banks were both reporting active loan application pipelines driven partly by reconstruction demand and partly by the underlying housing deficit that had been a structural feature of Jamaica’s market for years.
The outbreak of war at the end of February introduced a new variable that the rate cut had not anticipated. If oil prices remained elevated, construction cost inflation would erode the benefit of lower borrowing rates for developers. If inflation rose more broadly, the BOJ might face pressure to reverse its February cut. And if the external environment deteriorated severely, the appetite of commercial lenders for new mortgage commitments might contract. None of these consequences had materialised by 2 March — the cut of the reporting period — but they were visible risks as this edition goes to press.
Looking Ahead
As this edition is published on 3 March 2026, the war in the Gulf is less than a week old and its ultimate course remains entirely uncertain. The critical variables are the duration and severity of the Strait of Hormuz closure, the pace at which Iran can restore defensive capacity after the initial strikes, and whether diplomatic intermediaries can broker a ceasefire before the economic damage to oil-importing economies becomes severe. Jamaica’s economic management team — the Ministry of Finance, the Bank of Jamaica, the Planning Institute — faces the unenviable task of navigating a major external shock at precisely the moment when reconstruction momentum was building. The coming weeks will test the island’s hard-won economic resilience in ways that were not anticipated when the year began.
Jamaica Homes Global Affairs & Economic Review is published on the third day of each month, analysing the previous calendar month’s international and regional developments and their implications for Jamaica’s economy, housing market, construction sector, tourism industry and diaspora.
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