Brent dropped toward $108 a barrel after sliding 4% on Tuesday, while West Texas Intermediate was near $100. US efforts to move ships through the Strait of Hormuz will be paused, but a naval blockade will remain in place, Trump said in a Truth Social post. 

The global benchmark has climbed by about 50% since the conflict started at the end of February, cutting off hundreds of millions of barrels of Gulf oil from global markets. Flows through the chokepoint are now constrained by a double blockade, with Tehran obstructing shipping while the US is stopping vessels from accessing Iranian ports. 

Earlier, Secretary of State Marco Rubio told reporters at the White House that “Operation Epic Fury is concluded,” 66 days after the US and Israel began bombing Iran. “We achieved the objectives of that operation,” he said.

On Tuesday, Washington played down the prospect of a return to active war, with Defense Secretary Pete Hegseth confirming the truce that began just under a month ago is still in place. Meanwhile, General Dan Caine, the chairman of the Joint Chiefs of Staff, said attacks by Tehran on vessels in the Gulf and the United Arab Emirates didn’t constitute a breach of a ceasefire. 

The shutdown around Hormuz has left more than 1,550 commercial vessels, carrying some 22,000 sailors, trapped in the Persian Gulf, Caine said.

“Even if we see some deescalation headlines, the supply recovery is inherently delayed,” said Dilin Wu, a research strategist covering cross-asset markets at Pepperstone Group. “This is not a switch you can just flip: You still see limited oil shipment through the strait and it still needs time for stranded tankers to be rerouted, for the insurance market to reprice risk and for production to ramp back up,” she said.

In the US, industry data showed crude inventories fell 8.1 million barrels last week, which would be the biggest draw since mid-February if confirmed by official data due later Wednesday. 

“We’re holding the pattern from rally to profit-taking each day,” said Carl Larry, an oil and gas analyst at Enverus. “Markets may take it in stride but irrational exuberance usually gets the best of the market. Draws bring all the bulls to the yard.” 

Oil has seen wild price swings since the war started, prompting traders to move to the sidelines to avoid extreme volatility. Aggregate open interest in Brent has dropped to its lowest level since August.

Meanwhile, Saudi Arabia cut the price of its main oil grade for Asia next month from a record-high in May. It remained elevated as the hostilities in the Middle East continue to severely disrupt supplies.      

©2026 Bloomberg L.P.

Since the chokepoint shut on Feb. 28 due to the US-Israel war with Iran, vessels have rerouted around the Cape of Good Hope as an alternative to a corridor that normally carries about a quarter of the world’s seaborne oil along with large volumes of liquefied natural gas and fertilizers. 

While the detour has driven traffic around southern Africa up as much as 90%, it hasn’t boosted visits at regional maritime hubs, according to Rhenus Logistics.

“The increase is driven primarily by Asia–Europe and Asia–Mediterranean container services, alongside crude oil, LNG and dry bulk trades,” said Ebenezer Simba, the company’s ocean product manager for Africa and the Middle East. But it “has not translated proportionally into African port calls,” he said. 

Operational constraints such as weather disruptions and congestion have limited competitiveness at major South African hubs including Durban and Cape Town. 

The primary driver is that there “is limited commercial incentive for carriers to adjust port rotations” there, Simba said. 

East African hubs dependent on Suez routing — such as Djibouti and Port Sudan — are also net losers due to limited capacity relative to other Gulf-surrounded ports such as Jeddah in Saudi Arabia, Sohar in Oman and harbors in South Asia, he added.

There are some regional winners.

Gains are concentrated in a handful of locations positioned to service vessels rather than handle cargo, Simba said. Harbors such as Port Louis in Mauritius as well as Lüderitz and Walvis Bay in Namibia — along with offshore refueling, or bunkering, zones in West Africa — are benefiting from a jump in demand as ships take on fuel for longer voyages.

Time and Costs

Bunker calls at Port Louis surged 42% to 294 vessels in March from the previous month, while fuel volumes climbed nearly three-fifths to over 109,000 tons, the Mauritius Ports Authority said.

The reshaping of global trade lanes is adding time and cost to voyages. Rerouted trips between Asia, Europe and the Gulf can take as much as two weeks longer than standard transit times, said Vinny Licata, head of logistics and import compliance at Fictiv. Some carriers are also terminating trips outside the Persian Gulf to avoid the risks tied to the war.

For Africa, responsible for about 2% of global maritime exports and 5% of imports, the surge in shipping hasn’t translated into higher trade volumes.

“Africa has become a critical transit and servicing geography rather than a destination-port winner,” Simba said. Value capture is concentrated in “fuel supply and maritime services rather than container throughput,” he said.

The pattern echoes disruptions in late 2023 and early 2024, when attacks on Red Sea shipping forced vessels onto longer routes around southern Africa but failed to deliver sustained gains for most of the continent’s ports.

Security risks are rising again just as some container lines had begun testing a return to the Red Sea-Suez route in late 2025 and early 2026. As soon as the “Gulf conflict erupted, they suspended those trials and plans in case the Houthis renewed their attacks,” said Darron Wadey, a senior shipping analyst at Dynamar BV.

Maritime piracy off Somalia’s coast is resurging, with at least three hijackings reported in the past week, according to UK Maritime Trade Operations. The uptick reflects broader instability linked first to Red Sea attacks and now to tensions around Hormuz.

For shipping lines, the Suez route is no longer viable, making the Cape route their default.

“Many are treating it as the new reality,” Licata said, a shift that is already encouraging investment in permanent bunkering infrastructure across parts of Africa.

©2026 Bloomberg L.P.

“Project Freedom (The Movement of Ships through the Strait of Hormuz) will be paused for a short period of time to see whether or not the Agreement can be finalized and signed,” Trump said in a social media post on Tuesday. The effort to break Iran’s chokehold on the waterway had only begun on Monday.

The president cited “Great Progress” toward “a Complete and Final Agreement with Representatives of Iran.” He said the decision had been made at the request of Pakistan — which is helping mediate talks between Washington and Tehran — as well as other countries. He added, however, that a US blockade of ships transiting to and from Iranian ports would “remain in full force and effect.”

It was not clear what progress Trump referred to, and he didn’t provide details on what, if any, negotiations were in the works. His comments marked an abrupt shift from recent days, when he had voiced frustration over the pace of talks and indicated he wasn’t satisfied with Tehran’s proposals.

Brent crude oil dropped around 1% toward $108 a barrel, after sliding 4% on Tuesday.

Project Freedom was meant to sit at the center of the next phase of the US approach to Iran. The US military said it helped two vessels exit Hormuz on Monday, repelling multiple attacks by Iranian drones, missiles and irregular navy fast-attack boats.

According to Defense Secretary Pete Hegseth and Dan Caine, the chairman of the joint chiefs of staff, the Pentagon was deploying guided-missile destroyers with air defense capabilities, more than 100 aircraft, 15,000 personnel in the region, and a mix of drones including underwater platforms.

But Trump shelved the operation just hours after top US officials outlined the role the US military would play.

The administration appears to be seeking ways to ease the standoff that has escalated fuel prices, exacerbating economic strains that Republicans fear could lead to their party losing control of both chambers of Congress in the November midterm elections. Before Trump’s announcement, Secretary of State Marco Rubio told reporters at the White House that offensive operations against Iran were over.

While the US now seems intent on trying to deescalate the conflict, which has killed thousands of people in Iran and Lebanon and roiled global energy markets, the path to a deal that reopens the strait, which carries a fifth of the world’s oil exports, remains distant.

As Rubio spoke on Tuesday, a British monitoring organization reported that a cargo ship in the strait had been struck by an unknown projectile. The US said the shutdown around Hormuz has left more than 1,550 commercial vessels, carrying some 22,000 sailors, trapped in the Persian Gulf.

Further clouding the picture, prior to Trump’s announcement, Iran’s president dismissed American demands to resume talks as “impossible.” 

“The problem is that while the US pursues a policy of maximum pressure against our country, it also expects the Islamic Republic of Iran to come to the negotiating table and ultimately submit to its unilateral demands — an equation that is impossible,” President Masoud Pezeshkian said in a call with Iraq’s prime minister-designate Ali al-Zaidi, according to the semi-official Fars news agency.

Trump and top administration officials have described challenges with talks, in part because of divisions within Iran itself. 

Sometimes after an offer is made, Rubio said, “it takes five or six days to get a response,” since it has to wind its way through a system and be put in front of the supreme leader. 

“Their system has always been multilayered in this way. It’s obviously become more complex because of the damage they suffered during the war,” he said.

More Related to the War

• Chinese Foreign Minister Wang Yi held talks with Iranian Foreign Minister Abbas Araghchi in Beijing on Wednesday, Xinhua News Agency reported.
• At the UN, the US and its allies backed a draft United Nations Security Council resolution that would open the door to sanctions or even military action if Iran doesn’t ease its chokehold over the strait. The proposal would require support from China and Russia to pass.

(Updates with Iran-China foreign ministers meeting.)

©2026 Bloomberg L.P.

The package will fund a permanent government-owned onshore fuel reserve of around 1 billion liters and lift the minimum amount of fuel companies are required to hold by around 10 days, Prime Minister Anthony Albanese said in a speech in Sydney on Wednesday. That will support an expansion of overall storage to 50 days of supply for diesel and jet fuel, he said.

Despite being a major producer and exporter of energy, Australia sources the vast majority of its refined fuels from overseas and its stockpiles are among the lowest in the developed world. That left it exposed when the Iran war disrupted global oil supplies, contributing to widespread fuel shortages and rising prices.

“This is aimed at making sure that Australians can have more confidence in protecting our energy sovereignty, not just during this crisis, but going forward as well,” Albanese said.

The PM and Energy Minister Chris Bowen spoke about the plan on Wednesday after a national security meeting in Sydney. Bowen said Australia has responded to the crisis, and has more fuel today than when the conflict in Iran began. 

“This is a big change in our approach as a country,” he said. “We have been looking at how to be better prepared for future shocks.”

The package includes A$7.5 billion for the establishment of a fuel and fertilizer facility that will increase supply and storage by providing financial support such as loans, equity, guarantees, insurance and price support, according to Albanese.

It also designates A$3.2 billion to establishing the government stockpile and A$10 million to support feasibility studies into new or expanded fuel refining capabilities, to be co-funded with state and territory jurisdictions.

There’s at least one “serious proposal” for an additional refinery that would receive the support of the state and federal government, Albanese said. The nation only has two working refineries, one of which suffered an explosion last month.

“Today, after the world’s worst oil shock, Australia’s fuel and energy requirements will go some way to being future-proofed,” said Peter Khoury, spokesperson for Australia’s National Roads and Motorists’ Association.

(Updates with additional details from second paragraph, quotes from Albanese and NRMA.)

©2026 Bloomberg L.P.

Shipments of aluminum products from the world’s main manufacturing hub are on track to hit a record this year, the country’s top industry association has forecast. At the same time, copper — used in clean-tech products such as batteries — also stands to benefit from the shift.

Commodities markets from metals to oil and gas have been jolted by the conflict between the US, Israel and Iran, which erupted at the end of February and has forced the Strait of Hormuz to effectively close. Strikes on aluminum smelters in the Persian Gulf have hobbled output from the region that delivers about 9% of the world’s supply, with prices hitting a four-year high in London last month. 

That’s proving to be a boon for producers in China, which have struggled with the domestic fallout from the country’s protracted property crisis.

In energy, the Iran war has supercharged prices of crude oil and natural gas, making clean-tech products more attractive and hastening a move away from fossil fuels. Gotion High-Tech Co. Ltd., a major Chinese battery manufacturer, has said it’s seeing a renewed global focus on the green transition.

“For China, this dynamic reinforces its existing dominance,” said Xinyi Shen, senior adviser at the Centre for Research on Energy and Clean Air. “Chinese manufacturers already lead on cost, scale and supply-chain integration in clean tech. When global demand accelerates suddenly, they are best positioned to respond quickly.”

Chinese primary aluminum, however, isn’t readily available to global buyers. Beijing maintains export tariffs that keep large volumes within the domestic market. That constraint has magnified the impact of supply disruptions from the Gulf, pushing the premium of London prices over Shanghai to the widest since 2022.

Overseas premiums have reached “unbelievably” high levels, Mo Xinda, director of the light metals department at the China Nonferrous Metals Industry Association, said at a conference last month.

The dislocation has triggered a surge in arbitrage demand. Aluminum fabricators in China have received more overseas orders since late March, according to six traders surveyed by Bloomberg. Products used in power grids and automobiles are seeing particularly urgent demand because of the war, the traders said, asking not to be named because they aren’t authorized to speak publicly.

Full Orders

Some hot-rolling mills have full orders through till June, led by products used in electric vehicles, battery cells, cooling plates for energy storage and data centers, according to Beijing Aladdiny Zhongying Business Consulting Co. 

Exports of aluminum strand — a product used in power grids and exempted from a broad withdrawal in export tax rebates — may double from last year to 40,000 to 50,000 tons in April and May combined, primarily to so-called Belt-and-Road countries, researcher Shandong Aize Business Information Consulting Co. said.

A similar trend has emerged in copper, as well as in products linked to the shift toward renewables. Exports of copper wire and cable exports surged 36% in March from a year ago, according to customs data.

Elsewhere, shipments of solar cells jumped 80% and cargoes of lithium-ion batteries rose 34%, although the removal of the tax rebate may slow growth in future months. Chinese customs, meanwhile, reported a 53% surge in electric vehicle exports for March.

The burden of higher oil prices “could help sustain EV export strength and, by extension, copper demand in the months ahead,” consultancy Wood Mackenzie Ltd. said last month.

Rising fossil fuel prices are also fanning demand for solar and batteries, especially in power-constrained markets, according to CREA’s Shen. China’s exports reflect this, particularly to Southeast Asia and Africa, where businesses are adopting solar-plus-storage to cut diesel use, she said.

Overseas consumption is displacing weakness in China. Domestic EV sales are struggling, while copper demand growth is expected to slow to 2.8% this year from 3.8% last year, according to researcher Beijing Antaike Information Co.

On the Wire

China’s services activity unexpectedly expanded at a stronger pace in April, a private survey showed, even as price shocks from the Iran war ripple through the economy.

The world’s top beef exporter Brazil is close to reaching its annual quota for shipments to its biggest buyer China, a situation that’s set to redraw trade flows at a time when global consumers are facing higher meat prices. 

France announced fresh measures to curb reliance on Chinese rare earths in a move to safeguard industries ranging from consumer electronics to electric cars and offshore wind. 

The fight over US sanctions on China’s oil refining companies is being framed as a battle over high principles. In fact, it’s about raw power.

This Week’s Diary

(All times Beijing)

Wednesday, May 6

• Iran’s foreign minister visits Beijing
• RatingDog’s China services & composite PMIs for April, 09:45
• SMM seminar at LME Asia Week in HK, 13:00
• Other LME Asia Week briefings from S&P Global Energy, Citic Futures and GF Futures, from 14:15
• CCTD’s weekly online briefing on coal markets, 15:00

Thursday, May 7

• China’s foreign reserves for April, including gold
• LME Asia Metals Seminar and dinner in HK

Friday, May 8

• Bloomberg Seminar at LME Asia Week in HK, 10:00
• China’s weekly iron ore port stockpiles
• SHFE’s weekly commodities inventory, ~15:30

Saturday, May 9

• China’s April trade balance and 1st batch of trade data, ~11:00
  • Crude oil, natural gas & coal imports; oil products imports & exports
  • Iron ore, copper & steel imports; steel, aluminum & rare earth exports
  • Soybean, edible oil, rubber and meat imports; fertilizer exports
• China to release April aggregate finance & money supply data by May 15

©2026 Bloomberg L.P.

The warning from Goldman Sachs came as the CEO of Chevron said the supply impact from the continued closure of the Strait of Hormuz would lead to economies slowing to adapt.

Economic growth stalled

Mike Wirth, Chevron Chairman and CEO, said global supply shortages would begin appearing, with the 20% of world's crude supply usually passing through the Gulf waterway still effectively blocked due to the US/Israel conflict with Iran.

“We will start to see physical shortages,” he told a conference in California on Monday. “Demand needs to move to meet supply … economies are going to have to slow.”

Goldman Sachs has also warned that the speed ‌of depletion was becoming a concern four weeks after a ceasefire was declared. On Monday, that peace came under threat when Iran hit ships in the Strait and oil facilities in Fujairah, UAE, as the US attempted to free up shipping.

Stark numbers

The International Energy Agency (IEA) said global oil supply plummeted by 10.1 mbpd to 97 mbpd in March, while global observed oil inventories fell by 85 mb, with stocks outside the Middle East Gulf drawn down by a significant 205 mb as flows through Hormuz were choked off.

Goldman Sachs estimated total global oil stocks could fall ‌to 98 days of global demand by the end of May. However, the bank added that while those stocks were “unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning”.

Contrary to the global trend, S&P Global said China added 40 mb of crude to its storage in March.

Contracting economies

Countries in Asia could be the first to experience economic shrinkage. The continent is most heavily dependent on Gulf oil production and refining, Wirth explained, with Europe likely to be affected next as demand adjusts to reduced supply.

He described the overall effect of the Hormuz closure as “potentially as big as in the 1970s” when major supply disruptions shook economies worldwide, leading to fuel rationing and long queues at the pumps. A surge in jet fuel prices amid tighter supplies put US budget carrier Spirit Airlines out of business last weekend.

Stock under pressure

IEA member countries are required to hold emergency oil stocks equivalent to at least 90 days of their net oil imports, a rule designed to ensure a coordinated response in times of crisis. As of 25 March, members held more than 1.2 billion barrels of public reserves, alongside roughly 600 million barrels held by industry under government obligation, according to Statista.

Net oil exporters, the US, Canada, Norway, and Mexico, are not bound by this requirement. However, the US maintains the world’s largest emergency stockpile through its Strategic Petroleum Reserve, which currently holds about 415 mb (as of 27 February).

The IEA said Japan has the most strategic oil stock among net importers, at 208 days, while Australia has the least, at 49 days (as of December 2025).

Wirth said the US would be less impacted by shortages than many territories, but would eventually feel the effects.

The US Energy Information Administration (EIA) Short-Term Energy Outlook in March confirmed that. It revealed a list of estimated strategic crude oil inventories in selected countries (as of December 2025), topped by China at 1,397 mb, followed by the US at 413 mb, and Japan (263). OECD Europe held 179 mb, followed by Saudi Arabia (82), with the UAE (34) and India (21) showing the least. Iran held 71 mb.

Demand fall

The IEA said it expected oil demand to contract this year in April’s Oil Market Report.

A forecast of a 1.5 mb/d decline in 2Q26 would be the sharpest since COVID-19. Cuts in oil use were already emerging in the Middle East and Asia Pacific, mainly for naphtha, LPG and jet fuel.

Oil prices posted their largest-ever monthly gain in March in the wake of the “most severe oil supply shock in history”.

The IEA added: “Demand destruction will spread as scarcity and higher prices persist.”

A ceasefire between the US and Iran has begun to look increasingly fragile, with the two sides exchanging fire even as the US said it had opened a passage through the waterway and CBS reported two American destroyers had crossed into the Gulf. 

Crew members have reported hearing radio broadcasts warning vessels of new boundaries defended by the Islamic Revolutionary Guard Corps. Attacks on the United Arab Emirates port of Fujairah, meanwhile, underlined an expanded Iranian command zone — and kept the strait largely devoid of traffic in the early hours of the day.

Dubai would fall just outside the new Hormuz control area defined by Tehran, which extends to the south to Umm al-Quwain, along the United Arab Emirates coast.

“The US is attempting to level the power balance in the strait and that’s been reciprocated against by Iran. It’s escalation,” said Anoop Singh, global head of shipping research at Oil Brokerage Ltd. “I’m not expecting a quick reopening of bi-directional flows through the strait.”

Hormuz, a vital energy thoroughfare, has become a flashpoint in the nine-week war. Traffic has dwindled since the start of US and Israeli strikes on Iran, but it oscillates each time one side has tried to adjust levels of control.

The number of daily Hormuz passages is currently at near zero — compared to around 135 each day before the war.

The extended lockdown of Hormuz has already upended global freight markets, with decades-old benchmarks turning irrelevant overnight and at least one trading giant suing the index publisher for losses. If the US succeeds in guiding more ships out of the strait, the prospect of an exit for the hundreds of oil and chemical carriers trapped in the gulf could alleviate pressure on the market, said Singh.

Events so far this week, however, have only encouraged caution from the shipping industry. Abu Dhabi National Oil Corp confirmed on Monday that its supertanker, Barakah, was hit by drones while in Hormuz, and South Korea said that one of its ships was targeted for the first time during the war. 

©2026 Bloomberg L.P.

Where do biofuels fit into the energy mix?

Today, most liquid biofuels are used in road transport where they are blended with petrol or diesel at various concentrations. India aims to achieve an E20 (20% ethanol blend) by 2025, according to the International Energy Agency (IEA).

More than 90% of global biofuels are produced from food crops, mostly corn/maize from the US. Sugarcane, grown particularly in Brazil, is the second-largest source, followed by oil crops such as palm oil, soy oil, and rapeseed. Used cooking oil and animal fats represent about 12%.

Our World in Data says collectively biofuels meet 4% of global transport energy demand. Consultants BMI, part of Fitch, expect that to reach 5% by 2035.

What is driving current demand?

Asia, which buys about 80% of the oil shipped through the Strait of Hormuz, which is currently closed, has sought to increase biofuel use since the war began. Reuters says Vietnam switched fully to ethanol-blended gasoline from April, instead of June, due to energy price surges. Indonesia is raising the mandatory blending rate for palm oil-based biodiesel from 40% to 50%.

US refiners have been ordered to blend a record number of biofuels this year, while Brazil’s government is looking to raise the ethanol blend from 30% to 32% by the end of June.

Why are countries adopting biofuels long term?

Biofuels can bolster energy security by reducing reliance on imports and contribute to achieving emissions-reduction targets. The industry can support economic development and job creation, especially in rural areas, and utilise agricultural residues and organic waste, both of which are abundant in India. The bioenergy model promotes circular economy practices and social inclusion.

State-owned firm Empresa de Pesquisa Energética says the expansion of the biofuel sector saved Brazil about $405 billion in fuel imports over the past few decades.

Global policies such as the Renewable Energy Directive (RED II) and the Renewable Transport Fuel Obligation (RTFO) aim to make biofuels a key part of decarbonising the transport and energy sectors.

Which countries are leading the sector?

Several countries have thriving production agendas, including Brazil (sugarcane ethanol), Indonesia (biodiesel), and India (ethanol blending), according to the Organisation for Economic Co-operation and Development (OECD).

Ethanol and compressed biogas (CBG) are leading the growth in India, where the IEA says biofuel production, including biodiesel, could double by 2030 with suitable policies. Ethanol consumption there has scaled from under 2 billion litres to 11+ billion litres since 2018.

Global production of liquid biofuels has grown sevenfold over 20 years, driven by policies, particularly in the US, Brazil, and the EU, while consumption is projected to grow in Colombia, Argentina, Malaysia, and Thailand.

Planète Énergies cites the US, Brazil, and Indonesia as the top three producers, while China has significantly accelerated since 2023. Along with the EU, those regions produce more than 80% of the world’s total.

Brazil intends to increase biofuel production fourfold by 2035, according to Minister of Mines and Energy, Alexandre Silveira de Oliveira.

Other significant ethanol producers include Paraguay, the Philippines — projected to reach nearly 0.8 billion litres each by 2034 — and Peru, which is also a major biomass based diesel producer, along with Malaysia and the Philippines, says the OECD.

While most countries produce biofuels for domestic use, Singapore’s biomass-based diesel is largely exported. China, the US, the EU, Canada and Malaysia dominate biomass-based diesel exports, with a combined market share of 79% (OECD).

How is policy promoting biofuel adoption?

The International Renewable Energy Agency (IRENA) says decades of strategic policies, including the RenovaBio Initiative and the Fuel of the Future law, have made Brazil a biofuels leader, notably in ethanol and biodiesel. The government says blending anhydrous ethanol in gasoline is set to increase to 27%, targeting 35% by 2030, and the biodiesel blend in diesel rose to 15% in early 2025, with plans to reach 20% by 2030.

The IEA says India operates about 170 CBG plants with almost 300 under construction.

Canada’s Biofuels Production Incentive programme took effect in January. Designed to stabilise and protect domestic biofuel production capacity, it will give CAN$370 million in funding over two years.

In 2005 and 2007, the Renewable Fuel Standard mandated a minimum volume of US transport fuel to be sourced from biofuels. In Argentina, the 2021 Biofuels Law mandated a 5% blending rate for biomass-based diesel, according to the IEA.

Are there barriers to bioenergy production?

Yes, it can be highly dependent on changes in public regulations.

Relying on food-based feedstock carries risks such as harvest disruption, and critics have highlighted the impact of rapidly expanding monocultures, such as soy and sugar, on ecosystem health, water resources, and food security. Palm oil has courted controversy over massive land needs and biodiversity loss.

Currently, at least 90% of world biofuels come from food crops, rather than waste oils or fats. Consultancy Cerulogy estimated that 32 million hectares of global land are dedicated to biofuels.

OECD says interest in advanced biofuels is rising. But expanding production capacities remains challenging due to higher development costs than for fossil fuels, and government support will remain necessary.

ScienceDirect said Brazil’s biodiesel industry has experienced considerable growth, but technological goals in feedstock diversification, production processes, storage and stability, and quality control have largely not been achieved.

Are there downsides to biofuels?

Critics say they can raise food prices; already higher because of the war-fuelled surge in energy, transport and fertiliser costs.

Last year, Brussels thinktank Transport and Environment suggested biofuels were responsible for 16% more global CO₂ emissions than fossil fuels they replace “due to the indirect impacts of farming and deforestation”. For example, Semafor says Indonesia is planning a 560,000-hectare bioethanol estate in a sensitive forested region of Papua, while Brazil is expanding sugarcane cultivation in the Cerrado, home to many endemic and threatened species.

More positively, Empresa de Pesquisa Energética says Brazil is embracing “land-sparing” techniques, promoting the conversion of degraded pasture to meet rising demand without deforestation.

The Biofuture Industry Council argues that biofuels can be produced sustainably, and that certification and verification are improving.

How else is the sector evolving?

Growth is shifting from first-generation biofuels to technologies such as cellulosic ethanol and advanced biodiesel. These use non-food biomass, such as agricultural residues, forestry waste, and municipal solid waste, for a more sustainable approach without impacting the food supply.

Emerging options include algae-based biofuels (biodiesel, bioethanol, jet fuel), produced from photosynthetic microorganisms and utilising wastewater, and biohydrogen generated primarily from water using biological or electrochemical processes.

Produced from biomass with low-intensity harvesting, biomethanol can improve fuel efficiency when blended with gasoline or used in fuel cells, while fourth-generation synthetic biology-based fuels use engineered microbes to convert CO₂ and organic waste into liquid fuels.

IRENA says Brazil is exploring a link between bioenergy and hydrogen, aiming to use waste-to-hydrogen technologies for green hydrogen production in refineries.

Electric vehicle sales and solar panel imports have surged since the conflict in the Middle East began in late February, early signs that higher fuel costs and supply risks are reshaping behavior. 

Seoul — which imports the majority of its energy, including 70% of its crude oil via the Strait of Hormuz — has rolled out a supplementary budget with 540 billion won ($365 million) for solar and wind projects, energy storage systems and EV subsidies.

The shifting consumer demand and increased fiscal support suggests the crisis is influencing both markets and policy. But core targets — expanding clean power, phasing out coal and reducing gas dependence — predate the conflict, raising questions over the depth of the structural change.

“The government has set the right direction and framing, but it’s not yet doing enough to turn this into a real opportunity to accelerate the transition,” said BloombergNEF analyst David Kang. “The biggest missed opportunity is Korea’s long-delayed power market reform, especially on the retail side.” 

Liberalizing retail electricity markets, which are still dominated by Korea Electric Power Corp., would allow the state-backed utility to focus on grid upgrades needed to integrate renewables and EVs, said Kang. 

The climate ministry said reforms are underway and pledged to deliver tangible results from the transition.

President Lee has repeatedly framed the Iran War as a catalyst for faster change.

“The Republic of Korea as a whole must move very swiftly toward renewable energy,” he said last month. “Our future will be at a serious risk if were continue to rely on fossil fuels.”

South Korea gets about 80% of its energy from fossil fuels, of which 93% is imported, highlighting the nation’s high external dependence. Meanwhile, demand is rising from AI data centers, electrification and advanced industries.

Lee’s strategy, laid out before the crisis, centers on a state-led transition. He has pledged to phase out coal by 2040, cut gas use and expand renewables, while his government also set tougher emissions targets.

An April roadmap targets a 20% share of renewables in power generation and 100 gigawatts of capacity by 2030, as well as grid upgrades.

Consumers are already responding. Domestic EV sales more than doubled in March from a year earlier, while solar panel imports rose 137% to a record $76.6 million. 

The trend mirrors global shifts toward EVs, rooftop solar and other low-carbon technologies as energy security concerns grow.

Still, gaps remain. South Korea was among the few countries to see a significant increase in coal-fired generation following disruptions to oil flows through the Strait of Hormuz, according to the Centre for Research on Energy and Clean Air. The group said the rise was mainly because of weaker nuclear output.

Nevertheless, it illustrates how the nation still falls back on fossil fuels under stress. Coal and gas continue to account for the bulk of power generation, while renewables make up only about a 10th, with projects slowed by permitting and grid constraints.

South Korea’s transition lags industrial peers by about 15 years, but recent policy signals point to a stronger push to accelerate the shift, according to Paige Nguyen, Asia Director at the Institute for Energy Economics and Financial Analysis.

“Although South Korea’s renewable installation costs remain relatively high by global standards, they are becoming increasingly competitive and, in many cases, are already on par with or below the marginal costs of LNG-fired power generation,” Nguyen said.

Nuclear remains a key variable. Lee has backed continued reliance “for the time being,” maintaining plans to build two reactors and one small modular reactor, while saying any further expansion will be reviewed in line with the energy mix and public consensus.

Whether momentum leads to faster permitting, grid investment and new capacity will determine if the shift goes beyond plans.

“The current crisis has created a powerful momentum,” said Katherine Hasan, an analyst at the Centre for Research on Energy and Clean Air. “But to ensure this isn’t just a temporary shield, the government needs to take a leap.”

©2026 Bloomberg L.P.

The price to emit a so-called short ton of CO2 into the atmosphere under the Regional Greenhouse Gas Initiative — a market covering 10 states, including New York — jumped 31% last week to $47.56. Traders are betting that Virginia’s planned return to the market in July will boost demand for permits because the state is a major hub for data centers.

The rally has sent prices past California’s record CO2 price of $44 set in 2024. The US doesn’t have a federal-level carbon price and instead has two state-run markets in California and Washington, the latter of which has a price around $66. That’s in addition to the RGGI, which has existed since 2009 and is the country’s oldest program.

Carbon markets put a price on each ton of CO2 emitted into the atmosphere, typically by industry. The goal is to steadily reduce emissions while incentivizing the adoption of renewable energy and other clean technologies.

Liquidity in the US markets is relatively thin, especially compared with the European Union’s Emissions Trading System, which is the world’s largest market. RGGI covers only CO2 emissions from the power sector, which are expected to increase with the growing artificial intelligence-led demand for data centers. RGGI also risks adding to consumer bills, which are already rising because of the boom.

Still, analysts at BloombergNEF say the rally is overdone, especially with the Champlain Hudson Power Express transmission line expected to start this month, bringing clean electricity from Quebec’s abundant hydropower to New York and helping curb emissions in the US Northeast.

“The rally may have run ahead of itself,” said Bo Qin, an analyst at BloombergNEF, which forecasts a 2026 price of $26 per short ton under “a slow-decarbonization scenario.”

©2026 Bloomberg L.P.

 Scientists in China and the US found that tiny, colored plastic particles absorb sunlight as winds blow them around the world, trapping heat and contributing to temperature rise, according to the peer-reviewed paper published Monday in the journal . 

“The plastic problem is not just in our blue oceans, it is also in the invisible skies above us,” Hongbo Fu, a co-author of the study and an atmospheric scientist at Fudan University in Shanghai, said at a press conference. “Climate models need to be updated.” 

The researchers’ laboratory experiments and atmospheric modeling indicate that airborne plastic pollution has 16.2% of the heat-trapping impact of black carbon, the second biggest contributor to global warming after carbon dioxide. That effect is small on a global scale, according to the scientists, but can be significant in areas with high volumes of plastic, such as parts of the Pacific Ocean. There, plastic particles had 4.7 times the impact of black carbon. 

Scientists had previously detected the presence of nanoplastics and microplastics, which range in size from a billionth to a millionth of a meter, in the atmosphere. As plastic waste washes into the ocean and litters the landscape, it breaks down into smaller and smaller pieces when exposed to sunlight until winds sweep the particles into the atmosphere, where they become suspended in air currents. 

The planet is awash in plastic trash and its deleterious consequences for the environment, wildlife and human health is the subject of ongoing study. But past research suggested that microscopic plastic has a negligible impact on global warming, as white-colored plastic particles reflect sunlight. 

The scientists at Fudan University, however, found that the majority of plastic particles in the atmosphere are colored and trap heat. Drew Shindell, a climate scientist at Duke University and a co-author of the paper, said their experiments break new ground by precisely measuring the rate at which different-colored particles absorb sunlight. 

He said atmospheric plastic particles either are already dark, or lighter ones darken as they age. “The net effect is warming,” said Shindell. 

Those impacts are maximized in regions of the world where plastic pollution is concentrated, such as in the Texas-sized Great Pacific Garbage Patch that lies between California and Japan, the researchers said. Typhoons and tropical cyclones can also create atmospheric hotspots and affect regional climate patterns as strong winds suspend more plastic particles in the air. A super typhoon in 2023, for instance, caused a nearly 51% increase in the atmospheric concentration of nanoplastics, according to the paper. 

The scientists said the effects from such extreme weather would likely be strong but short-lived in the immediate area. 

Exactly how much warming is attributable to plastic remains to be determined due to the difficulty of measuring the concentration of particles in the global atmosphere and the rates at which they enter the air from the ocean or land. That means the researchers could be underestimating or overestimating the impact on climate change. 

“We need more measurements from all around the world to really characterize more precisely how much of the stuff is in the atmosphere,” said Shindell. 

©2026 Bloomberg L.P.

“It serves our national interests and long-term strategic objectives, aligns with our industrial, economic, and developmental ambitions, and gives us greater ability to accelerate investment, expand, and create value,” Sultan Al Jaber, chief executive officer of Abu Dhabi National Oil Co. said in a speech.

Adnoc touted its plans on Sunday, saying it’s planning to accelerate a growth push with 200 billion dirhams ($55 billion) in oil-project awards as part of an already-announced $150 billion program. The latest statement came the same day as a meeting of the Organization of Petroleum Exporting Countries, which agreed on a modest and symbolic increase in their June production quota levels.

OPEC’s control over production levels was a sticking point in the UAE’s participation in the group going back years. UAE Energy Minister Suhail Al Mazrouei has said that the disruption caused by the war in the Middle East created an opportune time for country’s decision to quit the group.

Adnoc has put UAE’s oil production capacity at 4.85 million barrels a day, which is higher than assessments by some other agencies. The country is increasing its capability to 5 million a day by 2027.

Leaving OPEC “is part of a broader effort to reshape our economy and industrial base through a vision that connects energy, technology, and industry, aligning our resources with national priorities to build a stronger, more resilient economy,” Al Jaber said on Monday.

©2026 Bloomberg L.P.

During the May online meeting, seven OPEC+ countries agreed to hike oil output targets by 188,000 bpd next month. The third consecutive monthly increase equals that agreed for this month, minus the share of the UAE, which quit OPEC and OPEC+ on 1 May.

Hike viewed as symbolic

The Iran war ceasefire remains in place, but Gulf oil supplies are still prevented from passing through the Strait.

Analysts said the latest OPEC+ “on paper” increase signals a business-as-usual approach, illustrating the cartel is poised to boost supplies once the conflict ends.

Jorge Leon, analyst at Rystad, said: “OPEC+ is sending a two-layer message to the market: continuity despite the UAE’s exit, and control despite limited physical impact.

“This is less about adding barrels and more about signalling that OPEC+ still calls the shots.”

First post-UAE agreement

Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman met on Sunday. With the UAE now out, OPEC+ has 21 members, including Iran, although in recent years only those seven nations plus the UAE — the world’s seventh-largest oil producer — have been involved in monthly production decisions.

Crude oil output from all OPEC+ members averaged 35.06 mbpd in March, down 7.70 mbpd from February, OPEC said previously, with Iraq and Saudi Arabia cutting most due to constrained exports.

UAE also leaves OAPEC alliance

The Organisation of Arab Petroleum Exporting Countries (OAPEC) announced on Sunday that the UAE had also exited the intergovernmental alliance. Formed in 1968 to boost cooperation among Arab oil exporters, it does not set production policies for its members.

UAE state news agency WAM said the UAE’s earlier decision to leave OPEC would enhance its “flexibility to respond to market dynamics while continuing to contribute to stability in a measured and responsible manner.” The UAE reassured it would “continue to act responsibly, bringing additional production to market in a gradual and measured manner, aligned with demand and market conditions”.

Independent oil strategy

Vandana Hari, Founder of Vanda Insights and Energy Connects columnist, suggested that a UAE OPEC exit could hasten post-Hormuz market normalisation, combining the ability to ramp up with export flexibility.

She said it was pumping about 3.4 mbpd before the war began on 28 February and claims a maximum capacity of 4.85 mbpd. Further expansion to 5 mbpd is targeted by 2027. “That spare capacity — freed from the constraints of coordinated output policy — will position the UAE as a key driver of supply recovery following a reopening of Hormuz,” Hari added.

Amena Bakr, Head of Middle East Energy and Opec+ Insights at Kpler, expects the UAE to produce oil well above pre-war levels.

“They want the flexibility of not having a quota … producing whatever quantity they want,” she commented.

“The United Arab Emirates sovereign decision to reposition itself within the global energy landscape, and to exit OPEC and OPEC+, is not a decision directed against anyone,” H.E. Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC Managing Director and Group CEO, said in his keynote address at the Make it in the Emirates forum in Abu Dhabi. “It is a carefully considered strategic decision that reflects our confidence in our capabilities, and our ambition for a more diversified economy and a better future”, he said.

“The United Arab Emirates’ sovereign decision to reposition itself within the global energy landscape, and to exit OPEC and OPEC+, is not a decision directed against anyone. It is a carefully considered strategic decision that reflects our confidence in our capabilities, and our ambition for a more diversified economy and a better future.”
- H.E. Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology, and ADNOC Managing Director and Group CEO

Supporting stable global markets

Speaking at the same forum, H.E. Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure, said the UAE’s exit from OPEC and OPEC+ was a strategic imperative in line with its future ambitions and the country would continue to be a provider of reliable, responsible, and lower-carbon energy supply while supporting stable global markets.

“We are a responsible producer … We're dealing with many of the world class industrial countries that are dependent on us, and we owe it to those partners who elected to invest the UAE to produce what the world requires, without restrictions, with collaboration, of course, with all other producers”, he said. “We are not new to this market. We understand that we will always be acting responsibly. Hopefully, we will contribute as well to world stability between supply and demand”, he added.

“We are not new to this market. We are a responsible producer … We're dealing with many of the world class industrial countries that are dependent on us, and we owe it to those partners who elected to invest the UAE to produce what the world requires, without restrictions, with collaboration, of course, with all other producers.”
- H.E. Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure

'Reopen Hormuz without any restrictions'

Both the ministers were categorical in their view that the Strait of Hormuz must remain open without any restrictions for the benefit of the global economy. “The Strait of Hormuz must never be used as a tool of coercion. Freedom of navigation is non-negotiable”, H.E. Dr Al Jaber said. Highlighting that the continued closure of the Strait was a security issue rather than a supply issue, the ministers observed that opening the waterway was the only way to stabilise global markets.

A bulk of the global energy supplies and maritime traffic that uses the strategic chokepoint has come to a standstill following the Middle East conflict that started on 28 February, revealing a key vulnerability for global trade.

Highlighting how the industrial sector plays a key role in accelerating the UAE economy, with its contribution leapfrogging by 70% to reach Dh200 billion ($55 billion), H.E. Dr Al Jaber identified energy, technology and industry as the key pillars of the economy. “Those who manufacture, own their decisions. Those who build, own their future. And those who combine both, secure their sovereignty and resilience”, he said.

ADNOC announces $55b investment

The comments came a day after ADNOC announced plans to award AED200 billion ($55 billion) in projects between 2026 and 2028, marking the next phase of its five year AED550 billion ($150 billion) capital expenditure plan and reinforcing its focus on domestic supply chains.

ADNOC said the planned awards – announced at the Make it with ADNOC forum – will reinforce delivery of the capital expenditure plan its board approved last year, which it described as an execution phase across large-scale developments.

Addressing the forum, H.E. Dr Al Jaber said ADNOC was entering a defining phase focused on pace, scale, and delivery. “As we deliver on this phase of growth, we are bringing together leading EPC contractors with 70 top UAE manufacturers to enhance accountability, maximise in country value and ensure Made in the Emirates products are first choice across our projects, and are at the core of how we procure, build, and execute”, he said.

Scaling industrial participation

Central to the announcement is ADNOC’s Local+ initiative — part of its ICV programme — which prioritises Made in the Emirates products that meet the company’s technical standards across project procurement.

The forum connected EPC contractors with 70 UAE based manufacturers that meet the required technical and qualification standards. According to ADNOC, the approach is intended to strengthen domestic supply chains and embed qualified local manufacturers more systematically into its project execution model.

By outlining awards through 2028, ADNOC has given suppliers a clearer view of upcoming opportunities. The awards are expected to span the company’s value chain, including upstream, downstream, and supporting infrastructure.

The $55 billion outlay, part of $150 billion the company had earmarked in capital expenditure through 2030, is planned for the period 2026 to 2028 and will help Adnoc meet rising global energy demand, the government-owned company said in a statement on Sunday.

The announcement coincided with a meeting of OPEC+ nations to decide on June production quota levels. Major members agreed via video conference to a modest and symbolic increase, delegates said, as the group sends a business-as-usual message following the UAE’s surprise exit.

“Adnoc is entering a defining execution phase in its strategy, driven by scale, pace and a laser-focus on delivery,” UAE Minister of Industry and Advanced Technology and Adnoc Chief Executive Officer Sultan Al Jaber said in the statement.

The UAE announced its departure from the oil cartel as of this month, saying the shortages caused by the Iran war will require agility to respond to market demands without being constrained by the collective decision-making process of the wider group.

The UAE’s OPEC departure deals a significant blow to the group, and comes after years of tension with its leader Saudi Arabia.

(Updates with broader spending plan, OPEC+ move from second paragraph)

©2026 Bloomberg L.P.

Hopes of an early easing of the twin blockades by Tehran and Washington faded after Trump said he’d review the plan, but cast doubts on whether it would satisfy him, saying Iran has “not yet paid a big enough price for what they have done to Humanity, and the World, over the last 47 years.”

A very large crude carrier that appeared to have made an outbound crossing several days ago, one of only a dozen such vessels to leave the Persian Gulf since the beginning of March, appears to be continuing its voyage with its cargo of Iraqi crude.

The Kin A, has left its anchorage at Duqm and is heading for the Suez Canal, according to vessel tracking data compiled by Bloomberg. 

The vessel popped up on tracking screens on Saturday off Duqm on the Omani coast, having previously been seen more than three days earlier heading toward Hormuz after loading at Iraq’s Basra terminal. It would likely have crossed the strait on Wednesday.

Observed commercial traffic in Hormuz between Saturday morning and Sunday afternoon was limited to the usual mix of small China-linked or Iran-affiliated ships, vessel-tracking data show.

The constrained movement highlights that access to the strait appears to be restricted to select vessels with regional alignment or approval.

Ship Movements

Outbound transits remained limited on Sunday morning. A single Iran-linked bulk carrier was the only ship observed leaving the Persian Gulf. It follows five ships making the outbound transit on Saturday, the most significant of which was the Sarv Shakti, carrying liquefied petroleum gas to India.

Vessels transiting Hormuz with active Automatic Identification System signals during the past day were confined to the narrow northern lane approved by Tehran.

Recent Iran-linked departures have largely stalled in the Gulf of Oman, though it’s unclear whether the ships are following regional itineraries or are being trapped by the US Navy blockade stationed further east outside the gulf.

Observed inbound transits on Sunday morning were limited to a single, small, Iran-linked cargo carrier. That follows two bulk carriers, a fuel tanker and an LPG carrier making the inward transit on Saturday.

The US blockade may encourage Iran-linked ships entering or leaving the Persian Gulf to switch off their signals to avoid detection, making it harder to get an accurate picture of traffic. That means transit figures may sometimes be revised higher when vessels reappear far away from the riskiest waters.

Even before the US imposed its latest restrictions, it was common for Iran-linked ships to stop sending signals as they headed into Hormuz to exit the Persian Gulf. They generally didn’t enable them again until well into the Strait of Malacca in Southeast Asia, about 13 days’ sailing from Iran’s Kharg Island.

NOTES: 

Because vessels can move without transmitting their location until they’re well away from Hormuz, automated positioning signals were compiled over a large area covering the Gulf of Oman, the Arabian Sea and the Red Sea to detect those that may have departed or entered the Persian Gulf.

When potential transits are identified, signal histories are examined to determine whether the movement appears genuine or is the result of spoofing — where electronic interference can falsify the apparent position of a ship. 

Some transits may not have been detected if vessels’ transponders haven’t been switched back on. Iran-linked oil tankers often steam from the Persian Gulf without broadcasting signals until they reach the Strait of Malacca about 10 days after passing Fujairah in the UAE. Other ships may be adopting similar tactics and won’t show up on tracking screens for many days.

This tracker will be published during heightened tensions involving Iran, and aims to capture traffic for all classes of commercial shipping.

©2026 Bloomberg L.P.

The Treasury Department announced on Friday that it blacklisted firms helping launder billions of dollars in foreign currencies, including converting oil sales made primarily with Chinese yuan into other legal tender. In a separate statement, Treasury unveiled sanctions on China-based Qingdao Haiye Oil Terminal Co. China is the biggest buyer of Iranian oil. 

“We will relentlessly target the regime’s ability to generate, move, and repatriate funds, and pursue anyone enabling Tehran’s attempts to evade sanctions,” said Treasury Secretary Scott Bessent in a statement. 

The US is ramping up economic pressure on Iran with a naval blockade in the Strait of Hormuz, through which about a fifth of the world’s oil and liquefied natural gas flowed before the war. President Donald Trump is pushing Iran to capitulate to US demands as the strait’s closure sharply raises global energy prices.

As part of the US effort to pressure Iran into a deal, Treasury has issued a regular cadence of sanctions including some targeted at Chinese entities. 

The US also sanctioned Qingdao Haiye, a China-based petroleum terminal operator, for allegedly trading Iranian oil. The Chinese firm is accused of using deceptive shipping practices to import tens of millions of barrels of sanctioned Iranian crude, the Treasury Department said in a statement.

Targeting China highlights how Washington’s escalating pressure campaign has extended beyond Iran to those that purchase its oil. The US naval blockade has curbed Tehran’s ability to export crude, cutting the major OPEC producer from a major source of revenue. As a result, the country is rapidly running out of storage capacity, raising the risk of accelerated production cuts, according to Kpler.

On Tuesday, the US Treasury had warned banks they were at risk of secondary sanctions if they supported independent Chinese refiners that purchase Iranian oil, and last week announced sanctions on one of China’s largest private refiners over ties to Tehran.

©2026 Bloomberg L.P.

Adjusted first-quarter net income of $1.16 a share was 20 cents higher than the average analyst estimate in a Bloomberg survey. Although profit dropped to a five-year low of $4.9 billion, that figure included the impact of temporary accounting charges tied to derivative contracts that the company expects to fully unwind over the coming months.

Even so, Exxon may revise guidance that forecast full-year daily output equivalent to 4.9 million barrels as the Iran war chokes Middle East energy flows and prevents the Texas oil giant from selling crude and liquefied natural gas from the region.

“Part of the challenge with giving guidance is, as you would imagine, we really don’t know how long the Strait of Hormuz will remain closed,” Chief Financial Officer Neil Hansen said in an interview.

Higher energy prices added $1.7 billion to earnings during the quarter, outweighing a $400 million blow from war-related production outages, according to company figures. Roughly 15% of Exxon’s worldwide output remains offline, Hansen said.   

Rival supermajors BP Plc and TotalEnergies SE also surpassed expectations when they disclosed results earlier this week. 

Exxon “is a fundamentally stronger company than it was just a few years ago, built to perform through disruption and across market cycles,” Chief Executive Officer Darren Woods said in a statement Friday. 

The unprecedented global energy shock triggered by the Iran war has pushed international oil prices to more than $125 a barrel. But oil companies in many cases have been hamstrung in reaping the financial windfall as the conflict strands oil and natural gas cargoes, and missile and drone strikes menace critical infrastructure in the region.

Exxon’s bought back $4.9 billion of shares during the quarter and affirmed its intention to repurchase $20 billion worth of stock this year. 

Exxon is mitigating production losses with steady ramp-ups in Guyana, the Permian Basin and the US Gulf Coast. It’s also benefiting from higher prices for non-Middle East production. 

Still, that hasn’t been enough to prevent Exxon stock losing ground to competitors. The shares have advanced about 1% since the war began at the end of February, the worst performance among the five Western supermajors. By contrast, BP is up 20%.

Before the war, Exxon had been the best-performing Big Oil stock since the pandemic due to a successful strategy of growing fossil-fuel production while lowering per-barrel costs. 

Exxon’s beat came after Exxon sharply revised down expectations for first-quarter profit due to losses on derivative positions tied to cargoes that had yet to be delivered by the end of the quarter. Those mark-to-market losses amounted to $3.9 billion in the period, which was at the high end of its guidance range. 

Exxon expects these losses to unwind over the coming quarters as the shipments conclude journeys and the transactions are completed. 

The conflict also poses longer-term problems for Exxon. 

The company holds stakes in two liquefied natural gas operations in Qatar that were severely damaged by Iranian missiles in March. A rebuild could take as long as five years and cost billions, according to Qatari officials. 

The equivalent of about 800,000 barrels of daily output is currently offline, including 100,000 from Qatari gas-liquefaction operations hobbled by missile fire, Hansen said.  

©2026 Bloomberg L.P.

“Naphtha imports from areas outside the Middle East, such as the US, Algeria, and Peru, will increase threefold by May, compared with levels before the Middle East conflict,” Takaichi posted on social media on Thursday. She said there have been disruptions in the supply chain due to overbuying of petroleum products by some firms.

The comments come as signs of the impact from the Middle East conflict begin to show across Japan’s economy. Japan has relied on the Middle East for about 90% of its oil. The disruption in oil supply is testing Takaichi’s leadership and diplomacy, as the government seeks to soften the economic blow from the war in Iran.

In early April, Takaichi said there was enough naphtha to last Japan over half a year. The assurances of incoming imports and supply lasting until next year suggest an increase in supply, but companies appear wary they may run short of the distilled product, which is used to make everything from tires and clothes to plastic bags and foam packaging.

Supply chain disruptions are beginning to create choke points across Japan’s auto industry, including the network of companies surrounding Toyota Motor Corp. Some smaller suppliers have said they’ll be unable to deliver some parts starting in two weeks, a Toyota executive told reporters on Tuesday. 

Other car parts suppliers have given cautious outlooks during quarterly earnings, saying it’s hard to judge the availability of vital components beyond the short term. 

The outlook for thinners, a naphtha product used in automotive paint, is also becoming increasingly uncertain, the Japan Machine Tool Builders’ Association said earlier this week. 

It echoed concerns from the National General Contractors Association of Japan, an organization representing building contractors across the nation who warned of imminent project cancellations due to the unstable supply of products derived from the material. 

“There are delays and disruptions in the delivery of building materials, and we are coming to a point where we can’t avoid having to delay or cancel construction” projects, the group said in a statement.

Even if the government has secured enough naphtha overall, the types needed by each company are different, said Takahide Kiuchi, an economist at Nomura Research Institute. “Differences in composition and grade can create a mismatch between macro-level supply and micro-level needs,” he said. 

Companies will need to share information to prevent unnecessary fears of shortages, he added.

Takaichi noted on social media that she was aware of supply concerns from the plastic packaging industry, adding that the government will continue to do what it can to ensure there is no disruption to the distribution of food products. 

Plastic packaging makers are already demanding higher prices, according to a report by consultancy Teikoku Databank, leading food manufacturers to pass through costs as early as this summer.

“As production is scaled back at each stage of the naphtha-based supply chain to conserve raw materials, output — particularly of downstream goods such as daily necessities — declines sharply,” said Kiuchi. “This situation is unlikely to ease quickly.” 

In a phone call with Iranian President Masoud Pezeshkian on Thursday that lasted about 20 minutes, Takaichi pressed Iran to ensure the safe passage of vessels through the Strait of Hormuz, according to a statement from Japan’s Foreign Ministry. 

The call came after a Japan-affiliated vessel was allowed passage through the strait on Wednesday. Takaichi expressed strong hopes that Iran and the US would resume talks to reach a final agreement, and the two leaders agreed to continue communicating, according to the statement. 

As Japan heads into a long weekend, Takaichi and other members of her government will travel abroad in what will also likely be a push to shore up supply chains and strengthen energy security. 

Takaichi is set to visit Vietnam and Australia, while Foreign Minister Toshimitsu Motegi is touring Africa. Former Prime Minister Fumio Kishida spoke with Philippine President Ferdinand Marcos Jr. on Thursday, pledging further cooperation on energy security and decarbonization.

(updates with details about the impact on companies)

©2026 Bloomberg L.P.

Brent for July rose above $111 a barrel, while West Texas Intermediate was near $106 — up 12% this week. In a written statement, Iran’s supreme leader Mojtaba Khamenei cast doubt on the likelihood of a deal with the US, vowing not to give up the Islamic Republic’s nuclear or missile technologies, and signaling Tehran would keep control of the strait.

Oil has soared more than a quarter over the past two weeks as the deadlock in negotiations extends the near-total closure of the crucial waterway, which before the war carried about a fifth of the world’s crude. The uncertainty over future supply has seen sharp price swings, and a flattening of the futures curve. 

“Selloffs are approached cautiously, but the bandwagon fills up on moves higher,” said Carl Larry, an oil and gas analyst at Enverus. “Every day continues to be an adventure, but also a chance to make money...quickly.”

Volumes were below normal in Asian trading. Markets are closed in many nations — including China, Singapore, Germany, France and Brazil — for Labor Day.

Meanwhile, Japan’s top currency official said authorities in Tokyo are maintaining readiness to intervene in the crude oil futures market, where speculative moves have been affecting the currency. Japan stepped into the currency market on Thursday to buy yen and bolster the currency, according to a person familiar with the matter, which caused the biggest drop in the Bloomberg Dollar Spot Index since January.

ConocoPhillips is warning of imminent “critical shortages” of oil for some nations as the war enters its third month. The supply pinch appears likely to significantly worsen as soon as June, Chief Financial Officer Andy O’Brien told analysts during a conference call on Thursday.

“The markets sort of had a bit of a grace period initially when the tankers that left the Persian Gulf in late February were still on the water; now all of those have reached their destination,” O’Brien said. “We are going to start to see some import-dependent countries potentially start to face critical shortages as we get into the June-July time frame.”

Meanwhile, the gap between paper and physical prices is narrowing as tangible domestic tightness begins to materialize for the first time since the war began. US crude exports surged to a record last week as global buyers tapped American producers for barrels to replace lost supply from the Middle East.

©2026 Bloomberg L.P.

Prices have surged above $200 a barrel, with inventories remaining tight, according to Société Générale analysts, as the bloc faces a complete halt of imports from the Middle East.

The supply disruption, triggered by the US-Israel conflict with Iran and closure of the Strait of Hormuz, comes as airlines prepare for peak summer travel.

European aviation vulnerability

Amid these developments, Kpler says that losses through the Strait have slashed the total global seaborne jet supply by nearly 21%.

Europe has historically relied heavily on the Middle East; it accounted for about 60% of external jet fuel imports to European OECD countries last year. Aviation in these nations consumes approximately 1.6 mbpd of jet fuel and kerosene daily, Société Générale says. Regional refinery production is about 1.1 million barrels, leaving a 500,000 bpd deficit covered by imports.

The International Energy Agency (IEA) previously warned Europe could face shortages by June if it doesn’t replace more than half of its regular Middle Eastern supplies. 

Limited alternatives

But replacement options are limited. Kpler says strong Asian pricing and export restrictions in China and potentially South Korea could divert cargoes away from Europe as those countries protect domestic markets, making eastern barrels less available.

The Atlantic Basin — primarily the US Gulf Coast and West Africa — is seen as a realistic source, but only a partial replacement due to logistical constraints and limited spare export capacity.

Société Générale said US global exports of jet fuel soared to a record 442,000 bpd in early April, about 200,000 bpd above usual. Pre-war, Europe typically received 30,000-60,000 bpd of that — as of late April, it was about 200,000 bpd.

Indian cargoes remain a potential source, but EU sanctions exposure linked to Russian crude runs at Jamnagar refinery could complicate supply.

Potential African relief

Some jet fuel flow is coming from Nigeria. The Dangote Refinery, regarded by many as Africa’s largest, is operating at full capacity, producing about 24 million litres of aviation fuel a day, reports Business Insider Africa. This has enabled it to export jet fuel and other products to multiple African and international markets while serving domestic needs, and to capitalise on a huge revenue opportunity as European buyers have been willing to pay a premium. 

European refiners are estimated to earn around $15 per barrel; Dangote plant margins are more than double that, supported by access to locally sourced crude and facility scale. Dangote also sources much of its crude from the US, other African producers, and Brazil, meaning it isn’t exposed to the Hormuz closure.

Rising crude prices have boosted export demand, as Nigerian exports to Europe reached record levels of 78,000-96,000 bpd in April.

Rising prices and possible disruption

That scenario places a strain on domestic airlines in Africa, which are facing their own operational cost hikes, and highlights the tension between export-driven profitability and local affordability.

Kpler says Europe is unlikely to fully replace the Middle Eastern jet fuel it has lost in the near term. This pushes the airline industry toward increased prices and longer trade routes to rebalance flows and maintain flight schedules. But the prospect of further flight cancellations, substantial price rises on retained routes, and the knock-on damage to tourism remains.

Sweden’s energy minister said that his country currently has a good supply of jet fuel, but warned of a shortage further ahead.

European airlines have warned of the impact of high jet fuel prices, but many have played down fears of an imminent shortage, including budget airline Wizz and  British Airways IAG.

This was supported by Galp, the Portuguese refiner and a major jet fuel supplier, which said it didn’t anticipate supply disruptions ahead of the holiday travel season.

The project is a quasi-revival of the canceled Keystone XL pipeline that would have transported Canadian oil sands crude to the US and drew widespread opposition from environmentalists. Former President Barack Obama rejected the project in 2015. Trump sought to revive it during his first term, and then former President Joe Biden withdrew a key permit for it in 2021. 

With the permit, the project has effectively cleared a key US federal regulatory hurdle. 

Under Trump’s authorization, Bridger is able to construct, connect and operate pipeline border facilities at the US-Canada border in Phillips County, Montana, enabling the transport of crude oil and a host of petroleum products. Authorized facilities include not just the pipeline extending from the US-Canada border but also a shut-off valve and pumping station within 2,000 feet of it. 

Trump predicted the construction would create “a lot of jobs.”

The permit comes as the US and Canada are locked in trade disputes over Trump’s imposition of tariffs on key imports including vehicles and steel as well as an ongoing review of the North American trade pact. The signing snuffs out any fear that the cross-border venture could get swept up in broader tensions.

Charlotte Power, a spokesperson for Canadian Energy Minister Tim Hodgson, said: “We are aware of the issuance of permits to Bridger Pipeline. The Government of Canada remains focused on strengthening Canada’s position as an energy superpower, supporting North American and global energy security, and advancing the diversification of our trade partnerships.”

Bridger Pipeline LLC had sought permission to construct and operate the 36-inch pipeline that’s meant to carry some 550,000 barrels per day of Canadian crude to Guernsey, Wyoming. The route would originate near Keystone XL’s planned border crossing, raising the prospect that parts of the long-stalled project could be re-purposed.

South Bow Corp., which was spun off in 2024 from TC Energy Corp., had been considering an expansion of its pipeline system. 

“South Bow continues to evaluate the Prairie Connector project, a potential expansion of its Canadian asset base that would leverage existing infrastructure and permitted corridors to improve market access for Canadian crude oil,” spokesperson Solomiya Martoiu said in a statement. “The concept behind the Prairie Connector is to move crude oil from Hardisty, Alberta to the Canada-US border, where it could connect with downstream pipeline systems. 

Martoiu added: “The Prairie Connector project remains in early stages and is subject to ongoing commercial, stakeholder and rights-holder discussions, regulatory processes and evaluation.”

Trump has repeatedly said he wanted to revive Keystone XL, the multibillion-dollar 1,200-mile (1,931 kilometer) project once backed by TC Energy. The proposed Bridger project would originate near where the Canadian section of the canceled Keystone XL reached the US border. In Canada, sections of the line were completed before the project was canceled and the pipe was left in the ground, leaving open the prospect that those segments could be used and connected to Bridger.

Alberta Premier Danielle Smith lauded the move by Trump. “The US is our most important trading partner and we will continue to deliver energy to help secure North American energy dominance,” she said in a social media post. 

(Updates with comment from Alberta premier.)

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Anaconda Invest SA, a boutique hedge fund based in Switzerland, has consistently opted to disregard comments from the White House suggesting a ceasefire may be imminent, according to Renaud Saleur, its founder and chief executive. As a result, he’s stayed long oil stocks based on a bet that chronic undersupply will support demand for years to come. The hedge fund manager’s returns outpaced gains in the S&P Global Oil Index, which is up 31% this year.

“In the short term, whenever Trump opens his mouth, you can see the whole party moving as if the flow [of oil] is going to resume overnight,” he said in an interview. In reality, oil prices have stayed high as an actual truce remains elusive, he said.

Since the US and Israel attacked Iran on Feb. 28, Trump has often suggested an agreement to end the fighting may be around the corner, while adjusting the terms under which he’d be willing to accept a truce. Those mixed signals have repeatedly rocked markets, with March in particular proving a particularly tough month for many hedge funds and other investors.

Saleur, who oversees $150 million at Anaconda, first made it known last month that he and his team were ignoring statements by the US president, arguing that to do otherwise would be unmanageable. Trump “changes opinion 10 times a day,” he said then. 

Anaconda, which markets itself as a firm looking for the best way to invest in the value chain of the global energy transition, doesn’t see the war as an opportunity to add exposure to clean tech for now, Saleur said.

“Oil today is much more profitable than renewables,” he said. Saleur, whose career spans stints at Fidelity Investments and George Soros’ Quantum fund, also said Shell Plc’s acquisition of Canada’s ARC Resources Ltd., announced on April 27, has encouraged him to invest.

The firm has even been borrowing to add weight to its long positions in oil stocks, bringing its gross exposure to about 130%, according to Saleur. 

Limited Room for a US-Iran Deal

Anaconda is short tech stocks including International Business Machines Corp., as well as Nasdaq futures and firms that produce small nuclear reactors. Other short positions include the iShares Semiconductor ETF, while the fund is long Applied Materials, Inc. and Mersen, a maker of electrical specialties.

The firm has also been buying semiconductor firms that are exposed to solar power, while shorting the main index for the chip sector, Saleur said.

The fund’s biggest holdings include Schlumberger N.V., Baker Hughes Co. and Patterson-UTI Energy Inc. 

“Drilling and services is probably an area which is going to be where people are going to focus more,” he said.

©2026 Bloomberg L.P.

“Those who’ve fought to keep the world hooked on fossil fuels are inadvertently supercharging the global renewables boom,” Stiell said in Paris at a high-level meeting between United Nations climate officials and the International Energy Agency to help prepare for the COP31 summit later this year.

Since the US and Israel attacked Iran on Feb. 28, the soaring price of oil and gas has forced governments across the globe to rethink their energy security policies. Earlier this month, the IEA said the ongoing conflict in the Middle East has already “thoroughly upended” the global outlook for oil consumption, as demand shows signs of permanently shifting to other sources of energy. 

The shock delivered by the Iran war is accelerating a trend that was already underway, Stiell said. 

“Last year, clean energy investment was set to be double that of fossil fuels,” he said. “Renewables offer safer, cheaper, cleaner energy that can’t be held captive by narrow shipping straits, or global conflicts.”

There are now “so many governments [that] are pushing renewables plans into overdrive: to restore national security, economic stability, competitiveness, policy autonomy and basic sovereignty,” he said.

Others have made similar observations. Pressure on consumers from higher fuel and electricity prices could help drive the shift over to cleaner energy, according to Australia’s former Prime Minister Kevin Rudd.

“Let us seize the opportunity presented by what is now unfolding in Iran and the Strait of Hormuz and — frankly — the shock which working people across the world are now experiencing in terms of continued hydrocarbon dependency,” Rudd said on Monday in Melbourne, speaking via video link from Hong Kong. 

“They are experiencing the physical terror of becoming insecure in their supply of what they need to drive to work,” he said.

©2026 Bloomberg L.P.

“If these countries significantly reduce their dependency on fossil fuels, it means that they’ll be investing in their own economy instead of importing fossil fuels from abroad,” van Veldhoven said Wednesday in an interview on the sidelines of the conference, which was co-hosted by Colombia and the Netherlands. “It means that they’ll be investing in clean technologies, but it also means that they’ll be shielding their economies against the kind of price shocks that we’re seeing currently.” 

The energy crisis stemming from the Iran war has prompted countries around the world to take emergency measures. 

“This coalition of the willing has of course brought together those countries who really feel a need to have the conversation about how to do this,” said van Veldhoven, “focusing on very concrete ideas about implementing this in their countries and learning from best practices from other countries.” 

Van Veldhoven said the priority should be near-term results, and expressed a hope “that countries don’t just focus on everything that needs to be done between now and 2050, but also really focus on what we can do in the next five years. That is where it really translates into implementation.” 

France unveiled a national road map away from fossil fuels on Tuesday. Other nations taking part in the conference include Germany, the UK, Italy, Brazil, Australia and Vietnam, as well as the European Union.

(Updates fourth paragraph with conference concluding.)

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“This is the return of BP to Venezuela,” the nation’s Acting President Delcy Rodríguez said during the signing event Wednesday inside the Miraflores Palace in Caracas.

She detailed the agreement covering the Deltana Platform, an oil and natural gas reservoir in eastern Venezuelan waters. BP Executive Vice President William Lin spoke at the ceremony, vowing to help Venezuela develop fields and announced the opening of a permanent BP office in Caracas, according to video of the deal signing aired on Venezuelan state TV.

Lin also offered the London-based energy giant’s experience and capacity in trading of natural gas and hydrocarbons.

The memorandum of understanding between BP and Caracas establishes “potential areas for co-operation in material gas and future exploration,” BP said Wednesday in an emailed statement. Venezuela state firm Petroleos de Venezuela SA also announced the pact.

The deal follows an energy conference in Caracas that drew large turnout from international companies and investors. European oil majors have been particularly keen to advance in Venezuela. Italy’s Eni SpA announced an oil project on Tuesday and has a plan to start exporting natural gas with Spain’s Repsol SA starting in 2031. 

Meanwhile, Shell Plc has been advancing the development of its Dragon project near the Trinidad border, and French major TotalEnergies SE is nearing trading contracts with PDVSA.

BP’s new Chief Executive Officer Meg O’Neill is looking to boost the company’s long-term reserves as it refocuses on oil and gas following a failed push into low-carbon ventures.

(Updates with remarks from Venezuela’s interim president and BP’s executive.)

©2026 Bloomberg L.P.

The global benchmark surged as much as 7.1% to eclipse $126 a barrel and hit the highest intraday level in four years, while West Texas Intermediate jumped above $110. The head of US Central Command Admiral Brad Cooper will brief Trump on Thursday, signaling a resumption of combat operations are seriously under consideration, Axios said, citing two unnamed people.

A ceasefire has held since early April but recent efforts to get negotiators from the two sides to meet have so far failed, with the US and Iran both maintaining their blockade of the the vital Strait of Hormuz. Central Command has asked for hypersonic missiles to be sent to the Middle East, which would mark the first time the American army has deployed those weapons.

The Strait of Hormuz has been effectively closed since the war started at the end of February, choking off flows of crude, natural gas and oil products, and driving up energy prices. On Tuesday, Trump discussed steps the US could take to prolong its blockade while minimizing the impact on American consumers at a meeting with oil and trading executives, the White House said.

“Trump has ripped away the security blanket the market was clinging to — the hope that the war was about to end,” said Robert Rennie, head of commodity research at Westpac Banking Corp. “Traders are now being forced to confront a much uglier reality: both sides still think they are winning, neither side has a clear incentive to negotiate, and energy prices are starting to accelerate higher.”

US Central Command has prepared a plan for a “short and powerful” wave of strikes on Iran, likely including infrastructure targets, according to the Axios report. Admiral Cooper gave the American president a similar briefing on Feb. 26, shortly before the US and Israel started the war, Axios said.

Trading volumes are thin for Brent’s June contract, which is set to expire at the end of the session. The more-active July futures advanced as high as $114.70 a barrel to the highest intraday level since June 2022.

Blockades of the Strait of Hormuz by the US and Iran have reduced daily transits to near zero. The International Energy Agency called the conflict in the Middle East the biggest supply shock in history, and Vitol Group says the market is facing a supply loss of around 1 billion barrels.

Trump told Axios separately that he would not lift a naval blockade on Iran’s ports until he secures a nuclear deal with Tehran, with Iranian officials defiant over a prolonged standoff. The US has turned away dozens of ships since deploying warships to stop Iranian vessels on April 13. 

The US is now seeking the forfeiture of two Iran-linked oil tankers that were seized by naval forces. Forfeiture, or confiscating oil cargoes, would represent an escalation of Trump’s economic offensive — and dovetail with Washington’s strategy deployed after the ousting of Venezuelan President Nicolás Maduro.

The Trump administration is also asking other countries to join an international coalition that would enable ships to navigate the Strait of Hormuz, according to a report from the Wall Street Journal, which cited an internal State Department cable sent to US embassies on Tuesday.

US crude exports surged to a record last week as global buyers tapped American producers for barrels to replace lost supply from the Middle East. Overseas shipments rose above 6 million barrels a day, eclipsing a previous high of nearly 5.3 million set in late 2023.

Some market metrics pointed to a tightening supply with the difference between Brent’s two closest December contracts strengthening to over $11 a barrel compared to around $3 two months ago.

“Somehow, another few weeks of stalemate does not look like something that will sit well with Trump,” said Vandana Hari, founder of analysis firm Vanda Insights.“ Prices have nowhere to go but up until a Strait of Hormuz reopening comes into line of sight. As of now, how and when that might happen is anybody’s guess.”

©2026 Bloomberg L.P.

China National Petroleum Corp. Chairman Dai Houliang said the company would respond to external shocks and place greater emphasis on security of supply, according to a statement following a meeting of the firm’s leaders on Wednesday. 

His remarks reiterated messaging from the Communist Party’s decision-making Politburo on Tuesday, when it met for the first economy-focused meeting since the war in Iran broke out. 

The war, now in its third month, has caused the largest disruption to oil and gas supplies in history, and shows no signs of letting up. Brent oil rallied to a wartime high Thursday after Axios reported that US President Donald Trump is set to receive a briefing on new military options for action in Iran, signaling the potential for a fresh escalation.

China has benefited from years of efforts to cushion itself from global oil volatility that include building up massive crude reserves, shifting its energy system toward coal and renewables, and electrifying major consuming sectors like transportation and heat. Still, the country is the world’s largest oil and gas importer, and the conflict’s impacts have already been felt in refinery cut-backs and higher power prices in some regions.

©2026 Bloomberg L.P.

On that front, Abu Dhabi’s move could prove constructive rather than disruptive.

The UAE enters this phase of market upheaval with one of the most credible and flexible supply profiles in the world. It was pumping around 3.4 million b/d before the start of the Iran war and claims maximum capacity of 4.85 million b/d, with further expansion to 5 million b/d targeted by 2027.

That spare capacity — freed from the constraints of coordinated output policy — will position the UAE as a key driver of supply recovery in the weeks and months following a reopening of Hormuz.

From constraint to catalyst

For now, the UAE’s production remains capped by logistics.

With the Strait of Hormuz effectively shut, exports are limited to volumes that can be routed via the Habshan-Fujairah pipeline, which has a capacity of around 1.5-1.8 million b/d.

This constraint masks the significance of the UAE’s policy shift. Even though it is theoretically free to ramp up production immediately, the physical impact is deferred until flows resume.

Once Hormuz reopens, however, the dynamic changes rapidly.

The UAE will be uniquely positioned to pivot from constrained producer to supply stabiliser — bringing incremental barrels to market just as buyers scramble to rebuild inventories and restore disrupted supply chains.

Aside from Fujairah in the Gulf of Oman, the UAE has crude loading facilities at Das Island, Jebel Dhanna and Zirku Island, which have been rendered inoperational by the Hormuz closure.

A measured ramp, not a supply shock

Crucially, the UAE is unlikely to flood the market.

A ramp-up towards 4.85 million b/d will take time — likely months rather than weeks — even under optimal conditions. That points to a gradual, controlled increase in supply that helps ease tightness without triggering a destabilising price collapse.

The reopening of Hormuz will not instantly restore equilibrium.

There will be a lag between the resumption of shipping and the arrival of crude into consuming markets, particularly in Asia. With typical voyage times of four to six weeks, inventories across key importing regions will continue to draw down even after the first cargoes leave the Gulf.

Focus on incremental supply

Not all the Gulf producers will be able to ramp up output all the way to pre-war levels evenly and quickly. Kuwait, for one, has said it would need three to four months to return to full capacity after the war ends. That is broadly the estimated timeline for other producers in the region, with the possible exception of Saudi Arabia, which may be able to go faster. Other problems may crop up, either subsurface, or due to above-ground infrastructure damage, as producers try to raise output towards full capacity.

The expected lag creates a window where incremental supply is most valuable.

Here, the UAE’s ability to ramp up — combined with its export flexibility — becomes a key accelerant in the normalisation cycle. Additional barrels can help bridge the gap between initial flow resumption and the full restoration of supply chains.

Fujairah, which has emerged as a major regional trading and bunkering hub, has an estimated 80 million barrels of oil storage capacity. It can serve as an additional buffer, allowing for faster mobilisation of exports and more responsive supply management once flows resume.

Fujairah is also one of the few storage hubs globally where oil inventory data is published on a weekly basis, providing a critical layer of transparency.

Asia stands to benefit most

The geographic distribution of the UAE’s exports amplifies this effect.

The country exported an average of 2 million b/d of crude in 2025, with nearly all of it destined for Asia. That concentration aligns closely with where the current disruption is being felt most acutely.

Asian importers — heavily reliant on Middle Eastern crude — have borne the brunt of the Hormuz closure. For them, the prospect of increased UAE supply post-reopening is not just helpful, but critical.

Unlike some producers, notably Saudi Arabia and to a lesser extent other term-heavy Mideast exporters, the UAE offers a high degree of commercial flexibility. It sells a meaningful share of its crude on the spot market in addition to term contracts, with no destination restrictions. This openness, reinforced by the launch of Murban futures trading on the IFAD exchange in March 2021, enhances liquidity and enables buyers to respond quickly to shifting market conditions.

That means Asian refiners will be able to access additional barrels without the friction of rigid contractual constraints — a key advantage in a volatile recovery phase.

From disruption to rebalancing

The UAE’s exit from OPEC and OPEC+ does not, in itself, change the immediate supply picture. The physical impact has been delayed by the Hormuz disruption, leaving the market focused on geopolitical risk rather than policy shifts.

The implications will become clearer once flows resume.

In a post-crisis environment defined by depleted inventories, fragile logistics, and cautious demand recovery, the speed of normalisation matters as much as the volume of supply. The UAE’s ability to deliver both — flexibly and progressively — positions it at the centre of that process. Rather than amplifying volatility, its exit may help shorten the disruption cycle and accelerate the market’s return to balance.