#politics + #energy

Iran’s blockade of the Strait of Hormuz has resulted in the loss of nearly a billion barrels of oil, with the shortage growing worse every day the sea lane remains closed.

Governments and industry will prioritize energy security, Le Peuch and Simonelli said. It is “no longer simply a talking point,” said Jeffrey Miller, the CEO of Halliburton , the other big oilfield services firm.

Investment in oil exploration and production will increase as a consequence, the CEOs said. Low carbon solutions like geothermal, nuclear and grid modernization will continue to see investment, Simonelli said.

U.S. crude oil will become more important that it has ever been in helping the world preserve energy security, said Kaes Van’t Hof, the CEO of Diamondback Energy , one of the biggest U.S. shale oil producers. U.S. crude exports have hit record highs during the war.

The oil market is now “fundamentally tighter” due to supply disruption, Miller said. The market has shifted from expectations of a surplus this year to a big deficit, he said.

If it wasn't for the tariffs, would Colossus be solar-powered? It would be much easier to make it solar powered, yeah. The tariffs are nuts, several hundred percent. Don't you know some people? The president has... we don't agree on everything and this administration is not the biggest fan of solar. We also need the land, the permits, and everything. So if you try to move very fast, I do think scaling solar on Earth is a good way to go, but you do need some amount of time to find the land, get the permits, get the solar, pair that with the batteries.

I just repeatedly tackle the limiting factor. Whatever the limiting factor is on speed, I'm going to tackle that. If capital is the limiting factor,
20:52 20 minutes, 52 seconds then I'll solve for capital. If it's not the limiting factor, I'll solve for something else.

If it wasn't for the tariffs, would Colossus be solar-powered? It would be much easier to make it solar powered, yeah. The tariffs are nuts, several hundred percent. Don't you know some people? The president has... we don't agree on everything and this administration is not the biggest fan of solar.

Oil demand is expected to contract by 80 kb/d this year, as the Iran war upends our global outlook. This is 730 kb/d less than in last month’s Report and a forecast 1.5 mb/d 2Q26 decline would be the sharpest since Covid-19 slashed fuel consumption. Initially, the deepest cuts in oil use have come in the Middle East and Asia Pacific, mainly for naphtha, LPG and jet fuel. However, demand destruction will spread as scarcity and higher prices persist.

Global oil supply plummeted by 10.1 mb/d to 97 mb/d in March, with continued attacks on energy infrastructure in the Middle East and ongoing restrictions to tanker movements through the Strait of Hormuz leading to the largest disruption in history. OPEC+ production fell 9.4 mb/d m-o-m to 42.4 mb/d while non-OPEC+ supply declined 770 kb/d m-o-m to 54.7 mb/d, as lower Qatari output offset gains in Brazil and the United States.

Global observed oil inventories fell by 85 mb in March, with stocks outside of the Middle East Gulf drawn down by a significant 205 mb (-6.6 mb/d) as flows through the Strait of Hormuz were choked off. At the same time, with limited outlets after the effective closure of the Strait, floating storage of crude and oil products in the Middle East rose by 100 mb and onshore crude stocks in the region were up by 20 mb. China added 40 mb of crude to tanks.

However, at the time of writing, it remains unclear whether the ceasefire will turn into a lasting peace and a return to regular shipping flows through the Strait of Hormuz. With oil-importing nations scrambling to source replacement barrels from an increasingly shrinking pool of supply, physical crude oil prices surged to record levels near $150/bbl, far above the prices in futures markets, with the physical-futures disconnect becoming increasingly acute. Even steeper gains have been seen for refined products, with middle distillate prices in Singapore reaching all-time highs above $290/bbl.

Resuming flows through the Strait of Hormuz remains the single most important variable in easing the pressure on energy supplies, prices and the global economy.

In early April, shipments through the Strait remained severely restricted, with loadings of crude, natural gas liquids and refined products averaging around 3.8 mb/d, compared with more than 20 mb/d in February ahead of the crisis. Exports through alternative routes – most notably from the west coast of Saudi Arabia and Fujairah on the east coast of the UAE, as well as the ITP pipeline that runs from Iraq to Ceyhan in Türkiye – had increased to 7.2 mb/d from less than 4 mb/d before the war. The overall loss in oil exports exceeds 13 mb/d, with associated production curtailment and damage to energy infrastructure in the region resulting in cumulative supply losses of more than 360 mb in March and 440 mb projected for April.

Overall, global oil demand is estimated to contract by 800 kb/d year-on-year in March and by 2.3 mb/d in April. Global oil demand is now projected to decline by 80 kb/d on average in 2026, compared to growth of 730 kb/d expected in last month’s Report.

The Global Critical Minerals Outlook 2025 showed that, for a remarkable 19 out of 20 important strategic minerals, China is the leading refiner, with an average market share of 70%. Moreover, our analysis shows that this concentration has only intensified in recent years. Reliance on a small number of suppliers increases vulnerability to shocks and disruptions, be it from extreme weather, technical failure or trade disruptions.

This is no longer just a theoretical concern. There has been a proliferation of export controls on key materials and technologies in recent years. New restrictions on rare earth elements and lithium-ion battery supply chains underscore once again the vulnerabilities and risks.

For rare earths used in magnets for various industries – notably neodymium, praseodymium, dysprosium and terbium – China accounted for around 60% of global mining output in 2024, followed by Myanmar, Australia and the United States. China’s dominance is even greater in the separation and refining stages, representing about 91% of global production, with Malaysia a distant second.

Moreover, China has significantly strengthened its position in the manufacturing of rare earth-containing permanent magnets – magnets that retain their magnetic properties indefinitely without the need for external power. Two decades ago, China accounted for around 50% of the production of sintered permanent magnets commonly used in cars, wind turbines, industrial motors, data centres and defence systems. This share has risen significantly to 94% today, making China the world’s single largest supplier of the component critical to the manufacturing of the most powerful motors that are used for many cutting-edge applications. Such high market concentration leaves global supply chains in strategic sectors – such as energy, automotive, defence and AI data centres – vulnerable to potential disruptions.

In 2024, China exported 58 000 tonnes of rare earth magnets – enough to manufacture components to make millions of cars, industrial motors or aircraft – or to build thousands of strategic military systems, data centres or wind turbines.

is not only rare earth elements that are impacted. On 9 October 2025, China also announced major export controls on lithium-ion battery supply chains, effective from 8 November. The new controls expand on previous measures and cover a much broader range of battery materials, technologies and equipment across multiple stages of the supply chain. They now include battery cells and packs for high-performance applications, cathode precursors, an expanded scope of anode materials, a broader coverage of lithium iron phosphate (LFP) cathode materials, and battery and material production equipment and technologies.

China currently dominates the midstream and downstream supply chains for batteries globally, with shares of 80% or more in many key areas. In some segments such as precursor cathode materials and LFP cathode materials, China maintains a near monopoly, with shares of 95% or above. This exceptional concentration creates multiple points of vulnerability across the supply chain.2

Looking further ahead, the new controls target some critical chokepoints in global battery supply chains, notably graphite anode material and cathode material precursors for which supply options outside China are extremely limited. If these supplies are disrupted, this could severely restrict the ability of the rest of the world to produce batteries, with potentially significant strategic and economic consequences.

LFP batteries are a case in point, with markets expanding rapidly. They represent half of the global electric car battery market and the majority of the energy storage market. While China currently dominates this segment, efforts are underway to develop LFP battery production outside China. However, new restrictions on LFP cathode materials could impede these initiatives, reinforcing China’s dominance in this technology, with major implications for energy storage deployment.

The Trump administration announced two more payouts Monday for energy companies to walk away from U.S. offshore wind projects under development.

Bluepoint Wind and Golden State Wind have agreed to end their offshore wind leases in exchange for reimbursements totaling nearly $900 million.

Interior said it’s following the model of its recent deal with the French energy company TotalEnergies, which is getting a $1 billion payout to walk away from projects off the coasts of North Carolina and New York. TotalEnergies agreed in March to what’s essentially a refund of its leases, and will invest the money in fossil fuel projects instead.

Bluepoint Wind and Golden State Wind were slated to be major offshore wind projects, each capable of powering more than 1 million homes when complete and helping the states of New Jersey, New York and California meet their clean energy goals. If the projects were to ever move forward, a developer would have to buy new leases. But under the Trump administration, the Bureau of Ocean Energy Management has rescinded all designated wind energy areas in federal waters.

Bluepoint Wind is a partnership between Ocean Winds and Global Infrastructure Partners. Global Infrastructure Partners, a part of investment giant BlackRock, has committed to invest up to $765 million into a U.S.-based liquefied natural gas facility. Interior said it would cancel the offshore wind lease and reimburse the company for the amount invested in the LNG project.

Golden State Wind is a joint venture by Ocean Winds and the Canada Pension Plan Investment Board. Under its agreement, Golden State Wind can recover about $120 million in lease fees after the same amount is invested in oil and gas assets, infrastructure or projects along the Gulf Coast, Interior said.

In his second term, Trump has gone all in on fossil fuels, which he says will lower costs for families, increase reliability and help the U.S. maintain global leadership in artificial intelligence.

His proposed budget would redirect $569 million from the state’s quarterly auctions of pollution permits away from the environmental spending those funds have been dedicated to since the auctions began in 2023. That half-billion-plus dollars would be used to shield state refunds of sales taxes for lower-income taxpayers from the budget axe.

To date, the auction funds — paid by major polluters for the right to keep damaging the global climate with emissions of heat-trapping gases like carbon dioxide — have gone mostly to expand clean energy use and to help 16 communities in Washington identified as being overburdened by air pollution.

The Climate Commitment Act, which created the state’s cap on carbon emissions and system of carbon auctions, specifies that the sales-tax refunds are an approved use of auction proceeds, though no auction proceeds have been used for tax rebates to date.

Rooftop solar has helped some tribal citizens lower their monthly energy bills from $160 to $10, as well as avoid blackouts.

Fossil-fuel combustion is the primary cause of the planet's rapidly heating climate.