There are about 127 oil tankers currently inside the Persian Gulf, according to Signal Maritime data — although it warns the figure is hard to be confident of. Dozens of others have positioned themselves near the strait, to be ready to take advantage of a surge in demand if traffic resumes. 

The global energy market was pitched into turmoil when the start of the war led to the effective closure of the waterway, which usually handles about a fifth of the world’s oil and liquefied natural gas. 

While that move threatened a major energy price shock, trade flows have since reorientated, governments have taken emergency measures, and a growing stream of oil is now sneaking out of the waterway under cover of darkness. Those shifts mean that while the reopening of Hormuz will still be significant, prices have already heavily retreated from their highs.

And even if a deal is signed, it’s still unclear what “reopening” of the strait may actually look like. While Trump said ships will have free passage, Iranian media has suggested Tehran will still have a degree of control. Bloomberg reported on Friday that the text of the memorandum of understanding would be open to interpretation in certain areas, according to a person familiar with the matter, including what the reopening of the strait would mean in practice. 

Several shipowners said they’d likely take a wait-and-see approach, noting that a resolution has seemed close in the past and then failed to materialize — including two months ago when both sides declared the strait was open, only for Iran to fire on vessels less than 24 hours later. Some cited recent crew deaths as a result of US strikes as a reminder of the risks of crossing.  

But some also said that once it did become clear that Hormuz was fully open, there would likely be a rush for the exit and queues near its entrance. 

In the event of a resumption of regular flows, it would spell a sudden flood of oil back onto the market as barrels that have been trapped in the Persian Gulf since the start of the war escape, and as Middle Eastern producers look to empty storage tanks that have filled up since the conflict began. 

Industry bodies have warned that extreme levels of traffic in Hormuz would raise the risk of crashes and ships running aground.

“There will be a little bit of a stampede,” if Hormuz reopens, said Amrita Sen, co-founder of consultant Energy Aspects.

Dark Flows Rising

Even without a peace deal, there have been growing signs that significant volumes of oil are flowing through the strait in tankers with their signals switched off — including with assistance from the US military. 

On Friday, US Energy Secretary Chris Wright said that about 7 million barrels a day of oil is making its way through the Gulf. JPMorgan Chase & Co. estimated that just over 5 million barrels a day are crossing, while one major commodity trader told a meeting of senior market analysts in Paris this week that their company sees about 4 million barrels a day crossing. 

Before the war, the strait typically handed about 20 million barrels of crude oil and fuel products, although the shortfall has also been reduced as Gulf countries reroute supplies via by pipelines that bypass the waterway.

Bloomberg reported previously that Middle East producers have been using vessels they control to ferry barrels outside of Hormuz, and transfer the oil to tankers waiting outside, before returning to the Gulf for further “shuttle runs.” 

The number of visible ship-to-ship transfers has continued to grow in recent days — Bloomberg could identify transfers in various locations off Oman and the United Arab Emirates on Thursday that would amount to roughly 16 million barrels of oil based on the size of the tankers involved, according to satellite imagery from the European Union’s Copernicus browser. 

The flows offer another sign of why oil prices haven’t spiked in the way many analysts projected when the war began. Brent futures were trading close to $87 a barrel on Friday, down more than 30% from their high in the middle of the war. 

If Hormuz did reopen, some shipowners have been busy positioning their vessels for a potential reopening, gambling on a rate surge as the number of cargoes increases and ships remain out of position. 

There are also some Middle Eastern producers that have kept vessels empty outside of the gulf, ready to get their country’s barrels moving again if and when Hormuz opens. Saudi Arabia’s national tanker giant has a handful of such ships in the middle of the Indian Ocean. 

©2026 Bloomberg L.P.

The shareholder, ENN Natural Gas Co., may decide not to extend a deadline to meet pre-conditions for a take-private transaction, the people said, asking not to be identified because the deliberations are private. 

An announcement might come as soon as the current deadline of Friday, though no final decision has been made, they said. 

ENN Natural Gas, which owns about 34% of ENN Energy through Xinneng (Hong Kong) Energy Investment, already agreed to extend a March 13 deadline to June 12.

ENN Natural Gas made a cash and stock offer in March 2025 that valued ENN Energy at about HK$90.5 billion ($11.5 billion). The Shanghai-listed company, one of China’s main importers of liquefied natural gas, said at the time it wouldn’t increase the offer, and that it planned to delist ENN Energy afterward. ENN Natural Gas has, meanwhile, applied to list shares in Hong Kong. 

Representatives for ENN Natural Gas and ENN Energy declined to comment. 

ENN Energy has tumbled 30% in Hong Kong this year, valuing the company at about $7 billion. ENN Natural Gas has dropped 12% over the same period in Shanghai, for a market value of $8.4 billion. Its first-quarter net income fell 33% from a year earlier to 655 million yuan ($97 million). 

©2026 Bloomberg L.P.

China’s independent oil refiners, known as teapots, have dialed back purchases and cut operating rates as they grapple with mounting economic losses, while recent US sanctions have made some buyers wary about the Iran trade. That’s prompted sellers to slash prices to try and entice buying interest.

Iranian crude flows to China tumbled to about 160,000 barrels a day in May, down from 1.8 million barrels a day in February, according to data compiled by Bloomberg. US and Israeli strikes on Iran started at the end of that month.

Even if there was big appetite for Iranian barrels, the US naval blockade has choked off flows. While other producers in the Persian Gulf are getting some of their crude out through the Strait of Hormuz, consultant Vortexa Ltd. estimates no oil from Iran has transited the waterway this month.

“The Iran-to-China oil trade is facing its biggest test yet,” said John Driscoll, chief strategist at JTD Energy Services Pte. in Singapore, who has spent four decades covering the oil industry, including as a trader and consultant. 

The US blockade marks the first time a physical barrier has been put in place to hobble the Iranian oil trade, following decades of economic sanctions meted out by Washington that have often been skirted by workarounds. The volume of crude from the Islamic Republic outside of the Persian Gulf that buyers could easily access has plummeted since the blockade started in mid-April.

Overall, there are about 132 million barrels stored on tankers inside and outside of the Persian Gulf, data from Kpler shows. Of that total, at least 57 million barrels are on ships idling and in transit off China and the Singapore and Malacca Strait, a near 55% decline since the blockade.

Beijing had instructed the teapots to make fuels at all costs to help cushion the impact from the Iran war, though that mandate was recently relaxed after their losses increased. The independent processors are by far the biggest buyers of Iranian crude, typically accounting for about 90% of sales.

China’s restrictions on fuel exports early on in the conflict have led to swelling inventories, meaning refiners don’t need to keep running at high rates. Energy Aspects forecasts teapots will reduce their overall runs by another 200,000 barrels a day in June from May. Russian oil is also getting cheaper.

“China has access to a lot of other oil,” said Fereidun Fesharaki, FGE NexantECA Chairman Emeritus, a veteran of the oil and gas industry with decades of experience. “There is no pressure at the moment.”

Recent US sanctions on giant independent refiner Hengli Petrochemical (Dalian) Refinery co. have also deepened caution around Iranian oil, with traders saying there is little incentive to take risks when margins are already thin.

The fallout is increasingly visible in Iran. Oil production slumped 19% last month and export revenues are coming under pressure, though earlier windfalls from higher prices and accelerated exports have so far cushioned the blow.

©2026 Bloomberg L.P.

The Iran War has boosted the coal-to-chemicals industry’s economics by raising the price of oil. Local officials are touting it as a key source of energy independence for China.

“Increasing production of coal-based chemical products will improve self-sufficiency in oil and gas domestically, helping to mitigate and offset energy security challenges at the industrial level,” said Huang Zhiqiang, executive vice chairman of the Inner Mongolia Autonomous Region’s government, at a press conference in the capital Hohhot on Thursday. “This reduces our reliance on imported oil and gas, lowering the proportion of foreign imports.”

The region is home to one of China’s top coal-to-chemical hubs — the city of Ordos, where the black fuel is transformed into olefins to produce plastics as well as oil and gas. The Baofeng olefins plant, which came online last year with annual production of 3 million tons, is the country’s largest, and several other major olefin facilities are under development in the area.

The Iran war has delivered a tailwind for the industry, and Bloomberg Intelligence projects coal consumption in the sector could grow as much as 20% this year.

Although the coal-based alchemy is bolstering China’s self-sufficiency, it is also undercutting the country’s climate progress. The industry’s expansion in recent years has led to rapid carbon emissions growth, climbing 12% in 2025 alone, according to the Center for Research on Energy and Clean Air.

Inner Mongolia has also emerged as one of China’s strongest clean energy champions, boasting the country’s highest wind generation last year and a slew of green tech factories, including from leading companies Ming Yang Smart Energy Group Ltd. and Envision Energy Co. 

The region leads the country in renewable energy capacity and output, with total installed renewable power exceeding 175 gigawatts, accounting for 9% of the national total, according to Huang.

Renewable power is so excessive in Inner Mongolia that output is often curtailed due to grid bottlenecks and insufficient local demand. The local government wants to use these resources to become a major hub to power data centers and the artificial intelligence boom.

“The region will shift from resource output to computing power empowerment,” Huang said. “We will transform Inner Mongolia’s natural resources into electricity and computing power.”

Local officials said on Thursday that the region would peak its emissions on schedule, before 2030, while defending coal’s role in China’s energy system. 

“We firmly believe there’s no backward industry, only outdated technology, and so we’re fully advancing the greening of mining operations,” said Huang. “Intelligent transformation closely aligns with national planning and layout — steadily promoting a series of green, low-carbon, modern coal-chemical projects.”

(Updates with additional comments from official from the 10th paragraph.)

©2026 Bloomberg L.P.

The event delivered significant economic benefits for Calgary and area, generating an estimated $70.6 million in economic impact, supporting more than 23,000 jobs and driving over 56,000 hotel stays.

Beyond its economic impact, Global Energy Show Canada reinforced Calgary's role as a meeting place for governments, industry leaders, and investors working to strengthen energy security and expand ties with partners around the world.

“Canada is back as a serious energy country. Canada is back as a place to invest capital. And Canada is back as a country that intends to build big things again.”
- Hon. Tim Hodgson, Federal Minister of Energy and Natural Resources, Canada

In his opening address, Hon. Tim Hodgson, Federal Minister of Energy and Natural Resources reinforced that, “Canada is back as a serious energy country. Canada is back as a place to invest capital. And Canada is back as a country that intends to build big things again.”

Hon. Danielle Smith, Premier of Alberta added, “We [Alberta] have the expertise, the regulatory systems and a strong commitment to responsible growth, and we're continuing to strengthen the conditions that allow investment and innovation to move forward. We welcome continued partnership and collaboration with industry, governments and investors from around the world.”

Leaders from key markets in Asia and Europe joined major producing nations and investors to strengthen relationships and explore opportunities across international energy markets. Strong participation included delegations and representatives from Japan, South Korea, India, Taiwan, Singapore, the United Kingdom, Germany, the United Arab Emirates, the United States, and Nigeria, highlighting growing international interest in Canada's role as a reliable energy partner. International receptions involving premiers, ministers and energy leaders further highlighted Alberta and Canada's role in meeting rising energy demand and expanding relationships with partners around the world.

Across the conference programme, leaders from government, industry and investment communities examined the commercial, geopolitical and technological forces reshaping the global energy landscape.

Responding to emerging industry priorities, the 2026 edition expanded its focus on AI and data centres, critical minerals and Canada's growing LNG opportunity. The Executive Conference adopted a new format featuring the Opening Plenary, Strategic Stage and Energy Talks, creating a forum for government leaders, CEOs, and investors to discuss the commercial and geopolitical forces shaping the future of energy.

Alongside the Executive Conference, the Energy Influencers Conference brought together industry professionals and technical specialists for discussions spanning oil and gas, new energy, AI, and data centres, highlighting the technologies, expertise, and innovation helping to drive projects forward.

As part of the conference programme, invitation-only Executive Leadership Roundtables convened ministers, CEOs, investors and policymakers to examine topics ranging from AI-powered energy demand and critical minerals to Indigenous partnerships, energy infrastructure, investment competitiveness and Canada's role in supplying global markets.

Highlighting the growing relationship between energy and artificial intelligence, Saravan Penubarthi, Chief Technology Officer, AIQ, noted that, “energy and AI are going to be by far, at least at this point, the two biggest engines of progress for humanity.”

Discussions throughout the week underscored the importance of market access, infrastructure development and international cooperation in supporting major energy projects.

Attracting foreign investments

During a media scrum, Hon. Brian Jean, Minister of Energy and Minerals, Government of Alberta, noted that, “If we [Alberta, federal government, indigenous communities and the Province of British Columbia] work together, we can actually compete with other jurisdictions that build pipelines in the span of months, not years or decades, as it happens in Canada. We need to send the notice to the world that we can build things in Canada and build them economically, efficiently, and be productive.”

The event also provided a forum for international leaders to share perspectives on Canada's role in meeting rising global energy demand. In his keynote address, Rt. Hon. Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), Ministry of Petroleum Resources, Nigeria, said, “Nigeria and Canada have opportunities to deepen cooperation across several areas of mutual interest, including LNG development and operations, methane emissions reduction and carbon management, carbon capture utilisation and storage, clean energy technologies, energy financing, and project development. Nigeria invites Canada to partner with her [Nigeria] at this very point in time to address global energy security. We need you now more than ever.”

In a panel focused on Canada in the new hierarchy of energy powers, Hon. Dinesh K. Patnaik, High Commissioner of India to Canada, discussed Canada’s role as a trusted global energy partner, noting “how can we [India] take advantage of the fact that you're [Canada] the fourth largest resource holder in the world, you have a democratic system which is free, fair, which we can rely upon. We have the same values. We would like to do more with Canada.”

Brian Boulanger, CEO and Director of ARC Financial Corp. mentioned in a private equity and institutional investors panel, “This is the third time that I’ve seen a big green light for Canada.” He added, “everyone wants more Canadian energy.”

Throughout the week, companies, governments, and industry organisations announced new partnerships, memoranda of understanding, and strategic initiatives, further demonstrating Global Energy Show Canada's role in bringing together stakeholders from across the energy value chain.

Across the exhibition floor, more than 500 companies spanning oil and gas, LNG, power generation, critical minerals, carbon management, artificial intelligence and digital technologies displayed products, solutions and innovations while creating opportunities for business development and international engagement. Together, they reflected the scale, diversity and innovation shaping the future of the global energy sector.

What to expect in the the next edition

Nick Samain, Senior Vice President, North America, dmg events, said, “Global Energy Show Canada 2026 brought together governments, industry leaders, investors and innovators at a defining moment for the global energy sector. Across three days, we saw conversations evolve into new partnerships, stronger international relationships, and opportunities across the energy value chain.

“The strong international participation this year reflects the growing importance of collaboration in meeting the world's rising energy needs. Global Energy Show Canada will continue to provide a platform where industry, governments, and investors come together to help shape the future of energy.”

Global Energy Show Canada will return to Calgary from 8-10 June 2027, continuing its role as Canada's largest energy marketplace and a global platform connecting industry, governments and investors to advance energy security, investment and international collaboration.

In an editorial published on Thursday, the Workers’ Daily — the official mouthpiece of China’s umbrella trade union organization — urged government agencies to mount an active response as new threats emerge to the rights of employees. It called on regulators to improve labor standards and strengthen oversight of AI algorithms, including by giving a greater say to trade unions and workers’ representatives.

“The benefits of technological advancement should be shared by society as a whole, rather than becoming a tool for a small number of employers to undermine workers’ rights,” the editorial said. It was titled “With the AI ​​wave surging, how can we build a strong ‘dam’ for workers’ rights?”

The deployment of AI tools around the world presents an especial challenge for China, where employment is a politically sensitive issue and maintaining social stability is a priority for top leaders. Evidence is already mounting that the technology is causing heavy job losses in countries like the US.

As AI spreads across workplaces, China is also having to contend with chronic weakness in the jobs market — a major obstacle for Beijing’s efforts to revive confidence among households. Citigroup Inc. has estimated that China’s “widespread but still shallow” adoption of AI eventually threatens to displace 70 million workers in the country.

Pressure on the world’s biggest labor force will also build as the economy transitions toward a technology-driven growth model and away from real estate. A recent analysis by Bloomberg Economics found that while China’s pivot to high-tech and green sectors is set to create tens of millions of jobs over the rest of the decade, it also risks leaving many workers behind because of skill mismatches.

What Bloomberg Economics Says...

“China’s high-tech sectors are becoming an increasingly important driver of growth, but they are not generating enough jobs to offset losses in manufacturing, construction and finance. The result is elevated employment pressure, especially among young people, and a surge in ‘flexible employment’ that is masking deeper weakness in the labor market.” 

— David Qu and Chang Shu. For full analysis, click here

The looming disruption coming from AI has prompted the Workers’ Daily to publish a series of reports devoted to labor protections during what it called the “AI wave.” The newspaper was founded in 1949 — the same year the Communists established the People’s Republic of China — to act as a “voice for China’s working class,” and it remains among the leading state media outlets in the country. 

In addition to the job losses blamed on AI, the newspaper identified other problems facing employees, such as violations of personal rights through “distilling” white-collar skills.

For blue-collar labor such as couriers and drivers working for ride-hailing companies, it said the algorithms used by platforms also failed to provide adequate transparency on how they allocate orders and set unit prices, worsening inequality in the distribution of income.

The newspaper said AI adoption that aims solely at reducing the use of human labor should be approached with caution. Such decisions “should not be left entirely to market forces” and government authorities need to play a key role, it said. 

The Chinese government has reportedly started to warn employers, particularly tech companies, not to cut jobs as they adopt AI. Court rulings in Beijing and Hangzhou have favored workers in such disputes and stated that companies are legally required to retrain or reassign workers before their employment can be terminated.

The country’s Ministry of Human Resources and Social Security said earlier this year that it would roll out measures to address AI’s impact on employment. 

(Updates with comments from Bloomberg Economics starting in sixth paragraph.)

©2026 Bloomberg L.P.

The funding will support construction of the first two phases of the Steel River Energy Center in Arkansas, which plans to deliver 1.63 gigawatts of solar and 1.9 gigawatt-hours of battery storage, Cypress Creek said Thursday in a statement. The output will be purchased by an undisclosed technology company with substantial power needs, the company said. 

“This is going to be a bit more of the norm as we go forward with deals of this magnitude and size as we see demand in the US kind of skyrocketing,” said Kevin Smith, Cypress Creek’s chief executive officer, in an interview.

The deal underscores how solar power remains a key part of the nation’s energy mix despite President Donald Trump’s attacks against clean energy since returning to office last year.

In the first quarter, solar and battery storage made up 91% of new US power-generation capacity additions, according to a report published Wednesday by the Solar Energy Industries Association and Wood Mackenzie. The growth comes as the rapid buildout of energy-hungry data centers drives demand for new sources of electricity.

Cypress Creek purchased the Steel River Energy Center from Swift Current Energy in March. The project will draw on US manufacturing, including steel produced in Arkansas, solar panels supplied by First Solar Inc. and trackers made by Nextpower Inc., Smith said. 

Financing for Cypress Creek was led by Barclays Plc, BNP Paribas SA, Banco Santander SA and Wells Fargo & Co.

©2026 Bloomberg L.P.

Competition between European and Asian buyers for US LNG has intensified after the Middle East conflict closed the Strait of Hormuz, choking off one-fifth of global supplies and driving up spot prices. That’s making US firms averse to signing the 20-year contracts sought by Atlantic SEE, as it pushes to expand Greece’s role as an LNG hub for the wider region.

“US suppliers have become reluctant to commit to a price for a long period of time,” Chief Executive Officer Alexandros Exarchou said in an interview. “This is a different situation from six months ago when they were gasping for such long-term agreements.”

Uncertainty about the evolution of prices — following damage to the world’s largest LNG export terminal in Qatar — means that some US suppliers are even offering incentives to reduce the size of existing contracts, the CEO said. 

Due to the capital commitments required to build and finance US LNG projects, smaller buyers may struggle to sign long-term contracts with American sellers. Much of US output is already committed to long-term European and Asian contracts.

Atlantic SEE — a joint venture between Aktor Group and Greece’s state gas supplier Depa Commercial SA — reached a 20-year deal in November with Venture Global Inc. to import 4 billion cubic meters of LNG a year from 2030. Most of that will be shipped to regional neighbors, including 1 bcm for Albania and 0.5 bcm for Bosnia-Herzegovina.

The company is looking to conclude negotiations with Romania by the end of the summer, which will bring total supply agreements to 3.7 bcm a year, said Exarchou, who is also chairman and CEO of Aktor.

Greece’s search for US LNG deals comes as the European Union phases out flows of the fuel from Russia by the end of this year.

Should deals be reached with Bulgaria and Ukraine later this year, Atlantic SEE will seek further US LNG contracts — taking total supplies to as much as 8 bcm. The company is also willing to explore potential supply agreements with countries such as Serbia, Croatia and North Macedonia, the CEO said.

While the Venture Global deal cushions Atlantic SEE from market volatility, the price of 20-year contracts has increased dramatically, according to Exarchou.

“We’re discussing for additional quantities from various suppliers in the US,” said the CEO, who expects spot prices to climb significantly from September.

Exarchou also warned that the EU has yet to introduce targeted measures to mitigate potential winter supply risks, as the region seeks to replenish its depleted gas inventories over the summer.

©2026 Bloomberg L.P.

The Gas Umm Al Rowaisat, owned by state-owned Kuwait Petroleum Corp.’s shipping arm, transited the strait before transferring the LPG cargo to another vessel that is currently heading for India’s Paradip port, according to traders, Kpler Ltd., and ship-tracking data compiled by Bloomberg. The tanker went dark after loading last month, reappearing near India on Sunday.

Major producers including the United Arab Emirates are increasingly switching off location transponders on tankers they control to export crude and liquefied natural gas through the strait. While shipments are well below pre-war levels, Rapidan Energy Group predicts around 2 million barrels of oil and related products are being ferried out of the Persian Gulf each day.

“With UAE-origin cargoes using this method successfully for the past few weeks, it doesn’t surprise me that others are following suit,” said Ciaran Tyler, a lead research analyst at Kpler. The UAE started using the tactic last month to ensure LPG shipments to key buyer India, Tyler said.

KPC didn’t respond to a request for comment. Kuwait also recently offered to sell its crude to refiners in Asia for the first time since the Iran war started, providing further evidence of flows getting out of the Gulf through Hormuz.

With its Automatic Identification System switched off, the Gas Umm Al Rowaisat loaded LPG on May 28 at Kuwait’s Mina Al Ahmadi refinery, according to Kpler, where KPC operates a gas processing plant. The vessel re-appeared on June 7 near Sikka along India’s northwest coast. 

Gas Umm Al Rowaisat then transferred its cargo to KPC-chartered supertanker Badrinath by ship-to-ship transfer, according to traders, ship-tracking data and Kpler. The vessel is currently signaling Paradip.

India is a key buyer of LPG and relied heavily on Persian Gulf producers for the product used primarily as a cooking gas in the Asian nation. The country has been forced to hike prices twice since the war cut off supplies. 

©2026 Bloomberg L.P.

India, the world’s largest urea importer, drew prices that were less than half of an April tender, a sign that the global fertilizer supply strain from the war in Iran is starting to ease.

National Fertilizers Ltd., a state-run producer that also imports the nitrogen-based crop nutrient for the government, has been seeking to buy 1.7 million tons of the fertilizer variety in a tender that closed Monday. The company received offers between $444.90 and $617 a ton, according to people familiar with the matter.

Offers for the west coast totaled about 3.1 million tons above a target for 900,000 tons, and a similar quantity for the east coast versus a target of 800,000 tons, said the people, asking not to be identified due to the commercial sensitivity of the information.

A fertilizer ministry spokesperson didn’t immediately reply to an email seeking comment outside of business hours. 

The Strait of Hormuz is a major conduit for fertilizer trade and its near-closure since the outbreak of the war has sent global costs soaring. India paid $935 to $959 per ton to procure supply in April, close to double pre-war levels. 

However, costs in some markets have now begun to ease. That’s partly driven by weakening demand as farmers grapple with lackluster grain prices. 

India’s purchases are closely watched as a price benchmark for other importers. The decline in this week’s tender could help the country control its fertilizer subsidy bill. 

Still, the country is ramping up purchases of liquefied natural gas from the spot market in tandem, partly to meet demand for domestic urea production. That’s coming at a cost, with spot LNG prices at about $18 to $19 per million British thermal units, compared with roughly $13 per million Btu under long-term supply contracts — which fertilizer plants previously largely relied on. The gas is a key feedstock to make urea. 

India regularly turns to global tenders to bridge its urea deficit. The latest procurement is the second since the start of the US-Israeli conflict with Iran and comes during the monsoon sowing season for crops including rice, corn and soybeans — a major planting period. 

The country’s domestic urea production was also disrupted earlier this year as the process relies heavily on natural gas, much of it sourced from the Middle East. 

India requires about 38.4 million tons of fertilizer for crops grown during the June-September rainy season, according to the fertilizer ministry. Current inventories stand at about 19.8 million tons, the ministry said.

(Updates with chart and details on LNG purchases in eighth paragraph.)

©2026 Bloomberg L.P.

This comes after the ministry had made the commitment in March this year, following H.E. Badawi’s remarks that the country was determined to deal with this issue at Egypt Energy Show 2025. Egypt had accumulated arrears of $6.1 billion by June 2024. 

However, the government began repaying these dues, which dropped to around $1.3 billion by December 2025. In May, Egypt made further payments of $714 million and then $440 million. The final settlement of $440 million was completed on 10 June. 

H.E. Badawi stated that “the accumulation of those arrears over previous years had had a direct impact on investment flows into the petroleum and gas sectors.”

Move seen as catalyst for investor confidence

He said that delays in E&P programmes, which consequently led to lower domestic production levels, widened the gap between production and consumption, and increased the country's import bill for meeting demands for petroleum products.

“It has removed one of the most significant barriers to investment inflows and accelerated development and production plans,” he said. 

Egypt has seen renewed interests in its oil and gas sector since 2024, particularly after a long period of falling production due to ageing infrastructure and underinvestments. 

Investor interest has surged in recent months, with Egypt securing over $19 billion in commitments from international oil companies for the next three years. These include $8 billion from Italy’s Eni, $5 billion from bp, $2 billion from the UAE’s Arcius Energy, and $4 billion from US-based Apache.

Sustained growth 

Since 2024, Egypt has focused on offshore exploration activities, and between mid-2024 and late-2025, Egypt recorded approximately 75 new oil and gas discoveries. During the same time period, it brought 383 wells online. 

Recognising that offshore fields are more challenging to drill and connect to the grid, H.E. Badawi said that these projects often require years of preparation and execution before reaching actual production.

But offshore development sets the stage for long-term energy growth, which could help Egypt catch up with its falling energy production. 

H.E. Badawi added that the industry is adopting new and innovative solutions to technical and operational challenges, and that “these efforts are helping to shorten the timeframes between discovery and production, maximising investment returns and enhancing domestic output and reduce the country's import bill.” 

Solar supplied 12.8% of US electricity last month while coal accounted for 12.2%, according to a report Wednesday from the clean energy think tank Ember, which analyzed monthly and hourly data from the US Energy Information Administration. 

The use of solar is surging just as the US scrambles to add new electricity sources to meet the insatiable power needs of AI data centers. The solar industry has managed to grow even as the Trump administration has taken steps to thwart its rise. It favors traditional electric sources, including coal and nuclear, which can produce power around the clock, unlike solar and wind.

“This is a structural change in the US power system,” Nicolas Fulghum, a senior data analyst at Ember, said in an interview. Companies are seeking more power, quickly, and are “looking towards solar to be a cheap, affordable and quick-to-deploy source.”

Solar generation in May surged 17% from a year earlier, while coal power shrank 11%. Still, the US remains heavily dependent on fossil fuels. Natural gas is the dominant electric source, with 37% of the electric mix in May, according to Ember. 

Coal, meanwhile, is seeing a surge of support from the government. President Donald Trump and his administration have vowed to keep all US coal plants running. The US Energy Department is blocking utilities from closing several aging power plants, and last week the White House pledged about $700 million in financial support for the industry.  

However, solar continues to gain share, in part due to wider deployment of batteries that can store energy from panels to be used when the sun isn’t shining, including during peak demand hours at night. Solar and storage together made up 91% of new US capacity installed in the first quarter, according to a separate report released Wednesday from the Solar Energy Industries Association and Wood Mackenzie.

That’s likely to continue, with utilities and data center developers increasingly viewing solar paired with batteries as a key energy source.   

“We are going to continue to see record battery deployment year after year,” Fulghum said.

(Updates with details on US coal policy in sixth paragraph.)

©2026 Bloomberg L.P.

Inventory draws are expected to average about 1 million barrels a day in the coming months, according to estimates from Vortexa Ltd., Kpler and Energy Aspects. That’s about a third of the crude that China is no longer receiving since the conflict led to the near-total closure of the Strait of Hormuz, but still pales in comparison with the roughly 1.2 billion barrels the nation has in its commercial and strategic stockpiles. 

The price reaction to what the International Energy Agency has called the biggest oil market shock on record has been relatively muted, as China refrained from tapping international markets to make up for the lost barrels. Global benchmark Brent is up less than a third since the conflict started, with analysts estimating that the nation’s imports could remain subdued for months to come — helping ease pressure on prices.

China has filled up its inventories to unprecedented levels over the past year. It started tapping those reserves in May, and drew down almost 25 million barrels in the month to June 7, Energy Aspects said, citing data from its satellite-tracking Kayrros unit.  

While that is sizable — global consumption is just over 100 million barrels a day — weaker downstream demand has made an even bigger difference. State-owned refiners have cut processing rates to record lows, fuel exports have been constrained under wartime measures aimed at preserving domestic supply and the switch to electric vehicles has accelerated. 

“China’s transport system has become structurally more flexible than in previous oil shocks,” said Emma Li, lead China market analyst at Vortexa. The rapid adoption of EVs has contributed to a drop of about 1 million barrels a day in fuel demand this quarter, she said. 

Some observers have argued that the demand destruction may not be permanent. 

“They were building a strategic petroleum reserve, now they’ve stopped building, they’re releasing some from their reserves. They have turned down their refineries, so that’s producing less products,” US Energy Secretary Chris Wright said in Washington on Tuesday. “That’s in response to a crisis, that’s not a permanent change.”

China’s strategic reserves are a tightly held secret, with long-range targets and widespread use of underground storage obscuring the picture. Market participants have been reliant on satellite imagery and third-party estimates to try to fill the gap.

While Beijing has continued adding to its SPR during the war, refiners have increasingly relied on commercial inventories rather than fresh imports, according to analytics firm Kpler. Exactly how much crude has come from state stockpiles remains unclear, given the opacity.

“We cannot completely rule out some SPR utilization,” said Sumit Ritolia, lead analyst for refining supply and modeling at Kpler, adding that less-visible underground reserves may have been used to replenish more observable storage facilities that supplied barrels to the market.

Chinese state refiners are expected to resume purchasing on international markets once they “meaningfully tap reserves,” said Jianan Sun, a London-based analyst at Energy Aspects. “But government authorization, subject to Beijing’s outlook on Hormuz, will be needed before sizable buying returns.”

©2026 Bloomberg L.P.

The Brookfield Asset Management Ltd.-owned company will focus investment on projects that combine solar and wind generation with batteries, rather than standalone assets that are becoming less profitable, Chief Executive Officer of Neoen’s local arm Jean-Christophe Cheylus said during an interview with Bloomberg on the sidelines of Australian Energy Week.

Australia’s energy transition has drawn billions of dollars from global investors as developers race to replace an aging coal fleet with renewable generation. That’s helped make the country’s battery fleet one of the world’s largest, but the boom has crowded out some of the revenue streams that once made them profitable.

“We are at an inflection point, and maybe we will see just more hybrid generation, or more batteries combined with generation, rather than batteries standalone,” Cheylus said.

“I think it’s going to be more challenging for standalone batteries to define their business case,” he said.

Neoen currently has more than 4 gigawatts of renewable energy projects in operation or under construction in Australia, representing over A$7 billion invested since 2012. That’s after the company sold its Victorian state portfolio to HMC Capital Ltd. in late 2024, clearing the way for a takeover by Brookfield.

©2026 Bloomberg L.P.

In May, Canada’s government and Alberta agreed steps and a timeline for a potential new west coast oil pipeline. Prime Minister Mark Carney has said a huge carbon-capture project dubbed ‘Pathways’ is a central condition for that new oil infrastructure.

But the deal fails to address regulatory barriers to the industry’s capital spending, Cenovus Energy Inc. Chief Executive Officer Jon McKenzie said Tuesday.

“Neither the Pathways project nor the west coast pipeline really make any sense” without that fundamental capital investment, he said at the Global Energy Show in Calgary.

The Alberta-Canada deal didn’t address how the industry was going to ship an extra million barrels of oil a day while also spending capital on the Pathways project, which he said would cost as much as C$30 billion ($21.5 billion), he said. No agreement on the project has been reached.

In one of the oil industry’s strongest rebukes of the “grand bargain” Carney and Alberta Premier Danielle Smith have discussed — a pipeline tied to emissions-abatement policies — McKenzie told the audience that the current regulatory framework means the “pipeline is unfinanceable” by the private sector.

The Alberta-Canada deal is partly aimed at fixing the province’s malfunctioning carbon market, and the province agreed to annual increases in the headline price on carbon. Its credits and offsets were trading last week at around C$32 per metric ton of CO2, according to Albert Ho, head of carbon intelligence for Carbon Assessors. That’s well short of target prices, and even down from about C$40 per metric ton when the deal was announced.

McKenzie’s comments stood in stark contrast to an earlier speech from Canada’s Energy Minister Tim Hodgson, who touted the pact with Alberta as establishing “a carbon market that works” to give investors long-term certainty, and “a practical middle ground.”

“It’ll show that energy production and emission reduction can move forward together” if Canada can cut carbon intensity in one of the world’s major oil-producing regions, he said.

Smith’s Alberta government is currently the proponent of the new oil pipeline to the Pacific coast. Her deal with Carney says the pipeline could be designated a project of “national interest” and construction could start as soon as September 2027.

Smith echoed Hodgson in a speech of her own. “There is increasing scrutiny and concern” about how energy is produced, she said, adding that Alberta would focus on “maintaining a stable, reliable supply of energy while continuing to reduce emissions and support innovation.”

Cenovus’s McKenzie argued that the certainty the Alberta-Canada deal provides is that it shows Canada is “increasingly out of step and uncompetitive.”

But “none of our customers have ever suggested or even asked about the carbon intensity of our crude,” McKenzie continued. If that was the case, pricing signals would be clear in the market, and government intervention wouldn’t be needed, he said.

The escalating carbon tax scheduled over the next decade “will require the premature shut-in and reclamation of oil-producing projects that would otherwise be economic to produce,” McKenzie added. “Industry has been clear that the industrial carbon tax is insidious and it should be revoked.”

(Updates with quotes from McKenzie, Alberta Premier Danielle Smith, and Canada Energy Minister Tim Hodgson)

©2026 Bloomberg L.P.

What are the ways in which global utilities can address the challenges and opportunities surrounding energy transition, energy security, and digitalisation?

These three challenges, which are indeed also opportunities, are interconnected, and utilities must address them as a system rather than in silos. In order to deliver decarbonisation and reliability simultaneously, utilities need to diversify their low-carbon generation portfolios by pairing variable renewables with firm capacity from nuclear, including small modular reactors, geothermal (where accessible), and/or long-duration energy storage. Further, digitalisation needs to be viewed not only as an operational upgrade, but as a key enabler of the transition. Deploying AI-enabled grid management, distributed energy resource management systems, and virtual power plants can unlock significant flexibility from existing infrastructure without massive capital buildouts. Utilities should also not treat rising demand from data centres, EVs, and industrial electrification as a threat to the current grid, but rather as an opportunity to build the grid of the future, one that is cleaner, more distributed, and more resilient.

With energy security a dominant theme globally, how can utilities support an “orderly” energy transition that leaves no one behind?

An orderly transition requires managing the pace and sequencing of change so that reliability and affordability are maintained. The IEA is projecting an unprecedented 3,500 TWh increase in global electricity consumption through 2027, with demand rising at nearly 4% annually. Much of this growth comes from data centres and EV infrastructure that do not directly serve the broader communities bearing the cost of grid expansion. Utilities are now at the centre of what the IEA calls a new “Age of Electricity,” with electricity consumption set to increase rapidly as electrification reshapes buildings, transport, and industry. Therefore, balancing the benefits and potential burdens of such electricity demand growth must be carefully considered. Data centre operators, for instance, should bring new, dedicated clean generation capacity as a condition of development rather than competing with existing ratepayers for constrained supply. At the same time, solving renewable electricity intermittency remains a key energy security issue as the share of electricity from solar and wind within energy systems continues to grow rapidly. The Masdar round-the-clock project in Abu Dhabi combines 5.2 GW of solar PV with a 19-GWh battery system to deliver 1 GW of firm, uninterrupted power. This demonstrates that solar-plus-storage can function as a dispatchable baseload, pointing to the future of affordable, reliable, clean electricity that needs to be replicated and scaled globally.

What are the most viable pathways for utilities to integrate hydrogen into the existing energy infrastructure?

For utilities, perhaps the most relevant use of clean hydrogen is for long-duration energy storage. As grids deal with ever-larger shares of variable renewables, the need for multi-day and seasonal balancing begins to exceed what lithium-ion batteries can provide economically. Utilities can produce green hydrogen via electrolysis powered by very low-cost clean electricity from large-scale solar, wind, or nuclear and then store and reconvert it through hydrogen-capable turbines or fuel cells as needed. This makes the economics of green hydrogen production a direct utility concern, fundamentally tied to procuring the least expensive form of long-duration energy storage, which hydrogen may or may not provide depending on context.

Of course, the strongest case for hydrogen is as a feedstock in refining, ammonia, and methanol production. Utilities therefore play an important enabling role by structuring tariffs, interconnection, and power procurement arrangements that let electrolysers operate as flexible loads on low-cost clean power, helping underpin bankable clean hydrogen supply for these industrial offtakers.

What are your thoughts on the role of CCUS in helping decarbonise hard-to-abate sectors?

Carbon capture remains a key decarbonisation technology for industries like cement and chemicals, where process emissions cannot be eliminated through efficiency and electrification coupled with clean electricity. What has changed recently, however, is the growing need for carbon capture to mitigate emissions from the power sector.

The resurgence of gas-fired generation to meet AI-driven electricity demand means utilities are now building new natural gas capacity that needs to be capture-ready. We are already seeing models where gas turbines pair with carbon capture systems designed to remove 90% or more of CO₂ emissions. However, the challenge remains to build viable business models for carbon capture, particularly when CO₂ utilisation and/or geological storage are not readily available. Without credible carbon pricing, offtake agreements for captured CO₂ or regulatory mandates, capture technologies will not scale. The technology works, but the economics need deliberate policy support.

The supertanker Kiara M was tracked off Sohar in the Gulf of Oman on Tuesday after loading about 2 million barrels of Iraqi crude last week. The vessel likely exited the strait over the past day with its positional transponder switched off, a tactic used to avoid being targeted. 

Further indications of improving flows emerged as Kuwait offered crude directly to Asian refiners for the first time since the war began. At least 4 million barrels are being marketed to buyers including refiners in China and South Korea, with the cargoes said to have already cleared the strait, though they have yet to register in tracking data.

Diplomatic momentum has also improved. US President Donald Trump said the US is nearing a deal with Iran that could bring the conflict to a close, though Israel has continued to express concerns over the long-term security implications of any agreement.

Visible flows remain muted for now. Apart from the Kiara M, five other commercial crossings were observed on Monday. Activity slowed on Tuesday morning, when only two crossings were visible in the waterway, according to ship-tracking data compiled by Bloomberg. 

Alongside the supertanker, Monday’s outbound traffic included a bulk carrier and a containership. A China-linked fuel tanker followed on Tuesday, heading out of the strait.

The US blockade of Iranian vessels in the Gulf of Oman is continuing to reshape regional shipping movements. American military officials said Monday that 134 commercial ships had been redirected and complied, while US forces disabled an empty oil tanker on June 8 after it tried to sail to an Iranian port in violation of the blockade.

Inbound commercial traffic on Monday was limited to three Iran-linked ships. An India-linked bulker entered on Tuesday.

Ongoing disruptions to AIS transponder signals continue to obscure shipping activity, leading to frequent revisions in transit counts as vessels resurface beyond higher-risk areas and fresh information becomes available.

The US naval presence may also be distorting the observations. Iran-linked vessels entering or leaving the Gulf could be switching off AIS signals to avoid detection, making it harder to track flows in real time.

Even before the US barred movement to and from Iranian ports, it was common for Iran-linked vessels to “go dark” when approaching Hormuz. Signals were often not restored until well into the Strait of Malacca — around 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 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.

Please note that the Hormuz Tracker now includes an NSUB sign-up option. The manual code is NI HORMUZTRAK.

©2026 Bloomberg L.P.

From July 1, Gordon Birrell will be executive vice president of upstream, while Richard Harding will take on the same role — in an interim basis — for downstream, the London-based major said in a statement. No job losses were announced.

The reorganization, which O’Neill signposted to staff soon after joining, follows a turbulent two weeks for the company that saw the surprise firing of non-executive chairman Albert Manifold. It unwinds structural changes made by then-CEO Bernard Looney in 2020 when he pivoted the firm toward low-carbon ventures and away from fossil fuels. It also moves BP closer to the models of other majors.

The new structure, with one operating segment focused on resource development and production, and the other on customers and markets, “will clarify accountabilities and enable faster, more effective decision-making,” O’Neill said in an announcement on Tuesday.

O’Neill is under pressure to deliver on a turnaround kicked off by previous CEO Murray Auchincloss last year. The company’s shares had underperformed those of rivals for years, drawing in activist shareholder Elliott Investment Management, which helped to kick start a reboot.

BP’s vast trading operation, led by deputy CEO Carol Howle, will work across the two segments, where “it connects the portfolio, optimizes flows and delivers material value uplift,” BP said.

Birrell’s operating segment will be in charge of oil and gas exploration, development and production, upstream joint ventures, as well as renewable natural gas, carbon capture and sequestration businesses. He’s been the London-based firm’s top exploration and production executive under multiple CEOs.

Harding’s division will include refining, terminals, pipelines, retail fuel stations, biofuels, aviation, hydrogen and lubricants. A recruitment process is underway for a permanent hire to the role. Harding came out of retirement in April.

Alongside the two main upstream and downstream segments will be several support functions. 

Renewables, including solar and offshore wind, will sit within a technology function led by Emeka Emembolu, executive vice president of technology. 

The reorganization is designed to clarify who owns what, speed up decision-making and make BP easier to understand both internally and externally, the CEO told employees in an internal message on Tuesday seen by Bloomberg. 

Four people who were in Birrell’s leadership team prior to Tuesday’s announcement will be leaving by the end of the year, according to people familiar with the matter.

Meanwhile BP Trinidad president David Campbell and Gulf of America vice president Roger Bryce will make up Birrell’s new leadership team, the people said.

In response to the moves, BP referred back to its statement.

More changes are expected to roles and team sizes, which BP leaders will share with staff as they develop, O’Neill told employees in the message.

Howle was already elevated from running trading to O’Neill’s deputy, an expanded remit that added oversight of the company’s ongoing portfolio review and strategy development to her responsibilities. She also occupied the position of interim CEO following the unexpected ouster of Auchincloss before O’Neill arrived.

“The structure restores clearer upstream accountability and aligns with peers,” Barclays analyst Lydia Rainforth said in a note on Tuesday. “We see this as positive, but execution and delivery remain key.”

BP’s revamped company structure comes after the shock sacking of Manifold in late May — about eight months after he joined and soon after the major hired O’Neill, Big Oil’s first female CEO. 

O’Neill and the rest of the board voted unanimously to remove him due to concerns about “governance standards, oversight and conduct.” Manifold contests BP’s version of events.

O’Neill told staff on an April call that she was focused on rebuilding trust with employees, which some said was received well after faith in senior leadership plunged in recent years, people familiar with the matter said at the time. 

She’s been given a tailwind at the start of her tenure, with energy market volatility caused by the Iran war contributing to a surge in profits from BP’s trading operation. 

Meanwhile, the company is continuing its strategic pivot back to oil and gas. Priorities include selling under-performing assets, paying down debt and reducing costs. BP suspended its share buyback program in February before O’Neill arrived.

“This organizational change builds on the concrete actions BP is taking to simplify its portfolio, reduce costs, maintain tight capex discipline and strengthen its balance sheet – all in service of growing value and returns for shareholders,” BP said Tuesday.

(Updates with details of restructure from 11th paragraph.)

©2026 Bloomberg L.P.

Exports jumped more than 19% from a year earlier, the most in three months and higher than all but one estimate in a Bloomberg survey. Imports soared over 27% in May, according to data released by the General Administration of Customs on Tuesday, leaving a trade surplus of $105.4 billion — the biggest since January. 

Chips and computers contributed to about half the growth in both exports and imports, Bloomberg calculations showed. Overseas sales of semiconductors soared 111% to $36 billion, the fastest expansion since 2013.

The strong export growth “suggests continued support from AI-related hardware demand and possibly some front-loading of overseas orders amid geopolitical uncertainty,” said Hao Zhou, chief economist at Guotai Junan International Holdings. “Strong export performance is providing a meaningful buffer to domestic softness.”

The global AI infrastructure buildout has emerged as a key force propelling Asian trade this year, cushioning the impact of a global energy crisis stemming from the conflict in the Middle East. It’s leading to a huge windfall for companies like the South Korean giant Samsung Electronics Co. as well as lesser-known Chinese hardware suppliers such as Zhongji Innolight Co., a maker of optical modules critical to data centers. 

Outbound shipments of computers and parts soared 66% in May from a year ago, the fastest pace since 2010 and up from a 47% gain in the previous month. High-tech exports climbed 51%, the most since 2021. 

Much of the surge came as a result of soaring chip prices at a time when a global race among tech giants to build data centers is leading to a shortage that could last for years. In volume terms, China’s chip exports rose only 2%.

In another sign of the impact from the AI rush on the world’s No. 2 economy, South Korea’s semiconductor exports to China jumped over 200% in May from a year earlier. China still relies on imported chips as restrictions imposed by the US block its access to many of the machines needed to make advanced semiconductors. 

Apart from AI hardware, car exports continued to post solid growth at nearly 40%. Automakers have no choice but to step up efforts to sell overseas, as domestic sales plunged 22% in May from a year ago in the sixth straight month of double-digit declines. 

What Bloomberg Economics Says ...

“The report allays concerns that the Iran war is taking a toll on China’s export engine, and highlights increasing linkages between the global tech cycle and trade flows.”

Eric Zhu, economist; read full report here

Exports to the US rose almost 36% — the most since 2021 — extending their recovery after a long streak of double-digit declines during the tariff war started by Donald Trump. The increase may have been exaggerated by the statistical effect of a low base from a year ago, when China and the US were locked in tit-for-tat tariff hikes that at one point brought levies to over 100%.

Export growth accelerated across most major regions in May, with the exception of the European Union and Latin America. Shipments to the Southeast Asian nations in the Asean group soared nearly 25% and climbed almost 19% to Africa. 

Though China’s sales in the EU expanded less than 8%, its imports from the bloc shrank for the first time in three months, meaning the trade surplus actually grew slightly and remained above $30 billion in May.

The imbalance will do little to soothe trade tensions with Europe. Officials there are preparing the ground for possible new tools to counter China’s export surge, which they partly blame on insufficient domestic demand, an undervalued currency and generous subsidies.

Back home, the AI boom is driving K-shaped expansion across China’s trade, factory production and industrial profits. In contrast to high-tech exports, overseas sales of traditional items like clothes and toys declined by 4% and 7% in May, respectively.

The divergence complicates China’s economic policymaking, as a large portion of the economy is still suffering from anemic consumer demand, even as some factories in AI-related fields prosper. 

The export strength is potentially making Chinese authorities more comfortable with a stronger yuan. In contrast to labor-intensive products, high-tech exports are less sensitive to domestic currency appreciation. 

With the cost of oil, chips and metals sharply on the rise, China’s export prices jumped at their fastest rate in three years in April, a reversal from years of an almost-unbroken contraction. But such increases have yet to spread to most Chinese goods, suggesting intense domestic competition still limits what factories can charge buyers.

And despite being the world’s biggest oil importer, China is buying far less crude from abroad, with inbound shipments falling 5% in the first five months of 2026 from a year ago in volume terms. 

“The external demand engine remains one of China’s key drivers,” said Lynn Song, chief economist for Greater China at ING Bank NV. “Domestic demand, though, continues to lag behind.”

(Updates with additional details throughout, adds comment in final paragraph. An earlier version of this story corrected month in second paragraph.)

©2026 Bloomberg L.P.

Brent crude slipped toward $93 a barrel after closing slightly higher on Monday, while West Texas Intermediate was around $90. Israeli Prime Minister Benjamin Netanyahu said the country is holding fire against Iran for now, but will respond should Tehran attack again. Iranian media conveyed similar sentiment.

The flare-up in hostilities put wider negotiations to end the war in the Middle East at risk, prompting President Donald Trump to appeal for de-escalation. A fragile ceasefire remains in place, but the Strait of Hormuz is still effectively closed by a double blockade maintained by Tehran and Washington, choking off supplies of crude, fuels and natural gas to global customers.

Reflecting remaining risk in the region, an unladen oil tanker in the Gulf of Oman was disabled by US forces on Monday after it “violated” the blockade by attempting to sail to an Iranian port, US Central Command said on X. Israel’s military also intercepted a “suspicious aerial target” from Yemen.

Late Monday, Trump said the US will declare “total victory” in its war with Iran over the next two weeks, according to comments in a virtual campaign rally for South Carolina Republicans. He said that negotiations are underway with Tehran, and reiterated that oil prices will fall once the conflict is over.

Disruptions from the war have led to a sharp decline in China’s crude imports. Inbound shipments last month plunged to the lowest level in more than eight years as the conflict crimped supply and Beijing held off scrambling for replacement barrels, leaning on its inventories and refinery run cuts.

Even if a US-Iran peace deal is agreed, multiple hurdles will impede normal resumption of oil flows. Among them, mines in Hormuz must be removed, shut-in fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired.

Oil remains “headline driven,” said Al Salazar, head of oil and gas research at industry consultant Enverus. “We believe prices still need to be firmly in triple digits to account fully for depleted stock levels.”

©2026 Bloomberg L.P.

Crude imports fell to around 33 million tons in May, according to customs data, equating to 7.8 million barrels a day, the lowest since October 2017. The country imported an average of around 11.6 million barrels a day over 2025.

The world’s biggest crude importer has leaned on export curbs, refinery run cuts and drawdowns from its massive inventories to cope with the impact of the loss of most Gulf barrels. This has helped ease pressure on global prices, with analysts estimating China’s imports could remain subdued for months to come. 

While China has continued adding to its strategic petroleum reserves during the war, processors have increasingly relied on refinery-held inventories rather than fresh imports, according to Kpler.

State-owned refiners have cut processing rates to record lows, while fuel exports remain constrained under wartime measures aimed at preserving domestic supply. Gasoline and diesel sales both posted double-digit declines in April as higher crude prices and slowing demand from China’s increasingly electrified vehicle fleet weighed on consumption.

Chinese imports of Iranian crude — a key feedstock for the country’s independent refiners — have also fallen as deteriorating margins, tighter US sanctions and Washington’s blockade of the Islamic Republic’s ports curb flows. 

Refining margins have narrowed since late April as processors exhausted cheaper feedstocks purchased before the war, according to industry consultant JLC. Product exports picked up slightly to 3.37 million tons last month, but remain at a multiyear low.

©2026 Bloomberg L.P.

QatarEnergy had prided itself on never missing a delivery to customers, even through the Fukushima nuclear disaster in Japan, the COVID-19 pandemic, and Russia’s war against Ukraine. But the closure of the Strait of Hormuz following the US and Israeli attack on Iran, followed by the Iranian missile strikes on Ras Laffan on 18 March, gave it no choice. A few LNG cargoes have since escaped the Gulf, but anything close to normal operations is far off.

Upending the LNG momentum

The attacks have upended an LNG story which seemed quite clear for the next few years. A vast wave of LNG expansion was on the way, mostly from Qatar and the US. Prices would fall significantly, and sellers would have to offer better terms and fight for long-term customers. Europe would predominantly buy US LNG to cover for the phase-out of the remaining volumes of Russian gas, while Qatari LNG would mostly go to Asia.

Buyers would enjoy a competitively-priced fuel, less polluting than coal, and a valuable complement to renewables because of its flexibility. LNG demand growth was seen as strong, though it would still have to be reasonably priced to win markets in middle-income Asian countries. Methane leakage and the long-term role of gas in economies with net-zero carbon goals were important concerns.

Perhaps surprisingly, the impact of missiles on Ras Laffan has not totally changed this picture. Assuming there is no return to full-scale fighting, the loss of Qatari capacity is serious in the short term but can be made up within a year or two.

The short-term outlook

His Excellency Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, President and CEO of QatarEnergy, has said that the damaged trains, with a capacity of 12.8 million tonnes per year (MTPA), about 17% of Qatar’s total, cost $26 billion to build. The repair time could be from three to five years, given the need for long-lead items. On 26 May, Japan’s Chiyoda announced that it would resume work on Qatar’s 32 MTPA North Field East LNG expansion, costed at $28.75 billion. North Field South and North Field West were supposed to start up in 2028 and 2031, respectively, a schedule now likely to have slipped.

Prices have risen sharply, of course, with the Japan-Korea Marker (JKM) up from $10.4 per million British thermal units (MBtu) just before the war, to $18.7 over the weekend. But this is far from the dizzying levels reached during the Russia-Ukraine crisis in 2022. So far, the market has coped fairly well, with countries boosting renewables, switching back to coal, and bringing in efficiency measures.

Concerns remain over the refilling of European storage. Stocks emerged from last winter at a low point, and have to hit 70-80% by October to assure security. On the whole, this looks achievable. The emerging strong El Niño should mean warmer global weather, diminishing the risk of a cold winter where householders would burn through a lot of gas.

A burst of higher prices and buyers’ desire to diversify will advance some liquefaction projects that had appeared doubtful. The US has nearly 100 MTPA of projects awaiting a final investment decision. The resurrection of Alaska LNG, a 20 MTPA project, is the most notable. Argentina, where Abu Dhabi’s XRG signed a framework agreement in February, Browse, Australia’s largest undeveloped resource, and Abadi in Indonesia, are candidates too.

Africa should benefit. Tanzania, with major fields but plagued by years of unfavourable government policies, could move ahead. TotalEnergies and ExxonMobil will be keener to advance their northern Mozambique ventures, which have been delayed by insecurity. The significant resources offshore Senegal and Mauritania, which today host only a single 2.5 MTPA facility, could be further exploited.

Conversely, buyers will be worried about depending on LNG. Pre-war, Qatar, the US and Australia accounted between them for 60% of global LNG supply, a far greater market dominance than for OPEC+ in oil. That oligopoly should gain even more market share with the American and Qatari expansions.

Even if the Strait re-opens promptly and fully, there is always the risk it could be closed again, or liquefaction attacked. Unlike oil, LNG cannot bypass the Gulf.

Rise in overseas LNG portfolios

And the US could be an unreliable supplier in its own way, with random threats against previous friends, the wielding of tariffs and sanctions, and the possibility of export restrictions if domestic gas prices rise too much. China, in particular, cannot rely on US LNG. Even national oil companies, such as QatarEnergy and ADNOC, are expanding their overseas LNG portfolios to be able to serve customers, regardless of events in the Gulf.

Asian buyers will therefore opt for coal, either domestic or from a more diverse global supply base, despite its polluting nature. And they, along with Europe, will forge ahead more aggressively with renewables. Falling battery costs make wind and solar much more realistic options for day-round power. Gas’s role will shrink to longer-term backup for electricity generation, home heating in legacy buildings in cold climates, feedstock in heavy industries such as fertilisers and iron and steel, and shipping fuel.

So the LNG glut we expected in January is likely to be delayed, spread out, and longer and deeper. Sellers will need to work harder to attract customers, with flexibility, lower prices and greater assurance of supply security. Buyers need nerve to get through the current crisis, and then cashing in. It is a strategic challenge Al Attiyah would have relished.

• Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis 

But rising electricity demand and the hurdles facing offshore wind means the gap that the transmission line helps fill is only getting bigger. 

“The question is, is it big enough to make a huge dent?” said Rob Gramlich, founder and president at consulting firm Grid Strategies. “And I think as the needs keep growing, no single line like this can make a major dent anymore.” 

The 339-mile long transmission line, backed by Blackstone Inc., can transmit up to 1,250 megawatts of electricity, enough to power 1 million households. It’s expected to deliver about 10.4 terawatt-hours of clean energy annually to the New York metropolitan area and to decrease CO2 emissions by an average of 3.9 million metric tons per year, the equivalent of removing 44% of passenger vehicles from New York City. 

The state’s climate targets are ambitious, even after Governor Kathy Hochul struck a deal last month to water down its landmark climate law. It’s still aiming for 70% of the electricity on its grid to be renewable by 2030. Excluding the Power Express, that share is now 32%, according to the state’s climate dashboard. 

The Power Express was one of the first projects that Hochul pushed for, said Ken Lovett, the governor’s senior communications advisor on energy and environment, and she “remains strongly committed to a clean energy future.” 

The line was designed to get more clean energy directly to New York City. But the city’s power demand is expected to rise as climate change makes summers hotter and building owners replace fossil-fuel heating systems with electric heat pumps to comply with Local Law 97. The New York Independent System Operator, which manages the state’s power grid, projects that electricity consumption in the city will increase by 23% by 2050.

“We’re going to have to push farther on every front,” New York City Comptroller Mark Levine said in an interview. “Mega projects like offshore wind, micro projects like rooftop solar in the city, innovative projects like geothermal wells.” The city’s pension funds have committed to invest $50 billion in climate solutions by 2035, Levine noted. 

New York’s challenge is part of a broader shift taking place across the US. After years of relatively flat electricity demand, grid operators and utilities are revising forecasts upward as electrification increases. Data centers and other large power users are putting new strain on grids, pushing states to build power plants and transmission infrastructure faster than anticipated. 

Since the Power Express began development, a complementary buildout of offshore wind has faced hurdles as President Donald Trump moved to block that sector. The Interior Department halted construction on Equinor ASA’s Empire Wind off Long Island before a judge allowed it to proceed. More recently, the Trump administration paid TotalEnergies SE $1 billion to cancel wind projects, including one off the coast of New York, a move that the state is challenging in court. 

Nevertheless, Empire Wind and another project serving New York customers, Sunrise Wind, are on track to be completed by 2028, said Harrison Sholler, a renewable energy analyst at BNEF. He doesn’t expect any additional offshore wind capacity to come online unless there is major policy change. But BNEF projects that about 20 gigawatts of solar capacity and 6 gigawatts of onshore wind capacity will  be added to New York’s grid over the next decade. 

Even with the Power Express online, the grid is still likely to experience strain during summers ahead. NYISO projects that New York City’s so-called transmission security margin will fall into a deficiency by 2029, meaning the grid would no longer meet reliability standards under certain conditions without additional resources. 

As new projects enter service, “reliability margins improve substantially,” NYISO said in a report, but then they start to erode as demand increases. 

“There’s no escaping the reality that significant load growth makes it harder to meet climate targets, and that’s just a reality that most states are facing,” said Gramlich. 

©2026 Bloomberg L.P.

State producer Saudi Aramco will lower the price for Arab Light crude for buyers in Asia next month by $6 a barrel to a premium of $9.50 more than the regional benchmark, according to a price list seen by Bloomberg. A $5 reduction was expected by refiners and traders in a Bloomberg survey.

The Saudis lowered prices for all grades by $10 a barrel to customers in Europe and the Mediterranean, while prices for varieties for North America were shaved by $2 a barrel.

As the US and Iran drag out talks aimed at extending a ceasefire in their conflict, global oil markets remain disrupted by the continued closure of the Strait of Hormuz. With tankers stuck inside the Gulf and empty vessels prevented from entering to pick up new cargoes, the region has drastically scaled back production, shutting in fields and slowing or halting refineries.

Aramco has been the mainstay of Gulf crude exports because it has been diverting oil through a cross-country pipeline to the Red Sea port of Yanbu. That allows the company to ship as much as 70% of its pre-war exports while supplying crude to the country’s west coast refineries.

Those facilities have been pumping out products like diesel and jet fuel as Aramco seeks to capitalize on margins that have surged for refiners. 

The profit from turning crude into products remains high, but slipped at the end of May, possibly reflecting declining demand as consumers deal with higher prices. Aramco traditionally prices its crude to shadow refiners’ profits, potentially explaining its decision to cut official prices for July.

The OPEC+ producers group, led by Saudi Arabia and Russia, decided to raise production targets for July by 188,000 barrels a day at a meeting on Sunday. The increase is largely symbolic with Hormuz still mostly shut, though it indicates that the group won’t restrict members from pumping oil onto markets once the Iran conflict is resolved. 

©2026 Bloomberg L.P.

Vulnerability exposed

The conflict again highlighted the vital importance and vulnerability of the Strait of Hormuz. It accounts for about 20% of global LNG transit, so a collapse in trade through the route has widespread ramifications.

The world’s LNG market was nearing a turning point after the disruption from Russia’s war with Ukraine. Prior to the Iran conflict, Qatar shipped 110 bcm of LNG annually to Asia, Europe, and increasingly Africa. But this relied on robust transit routes. About 20% of the world’s LNG is supplied by Qatar, but attacks on the Ras Laffan refinery have affected about 17% of the country’s export capacity. Repairs could take several years in a worst-case scenario, slashing revenue by about $20 billion a year. Production disruptions will lead to higher costs or shortages for countries reliant on Qatari LNG, especially in price-sensitive Asian and European markets. Asian LNG prices more than doubled to three-year highs, including a surge in the Japan-Korea Marker (Platts JKM) reported by Bloomberg in early March.

As hostilities began, European natural gas prices soared above 60% on the benchmark Dutch TTF (Fastmarkets); from €30 per MWh to hit a high of €74 per MWh, reflecting panic over tightening LNG supplies.

It was feared an escalation of the conflict could increase the likelihood of commercial disputes among LNG market participants in the ensuing months. And sustained high gas prices might yet prove inflationary globally, reduce worldwide GDP growth, and push major economies into a global recession. 

The fragility of peace: the ceasefire and the LNG crisis

When a ceasefire came into place on the ground in the Middle East, energy markets reacted with predictable volatility, seeing oil and gas prices plunge by as much as 16%. However, the headline figures mask a far more stubborn reality. While a continued cessation of hostilities was a welcome development, as a structural fix for the global natural gas and LNG market, the initial 14-day window was simply a tactical pause in a much larger strategic crisis.

Estimates suggested that approximately 15 LNG-laden tankers could transit the Strait of Hormuz over that fortnight. This represents roughly 1 million tonnes (Mt) of LNG — a volume that, while significant in isolation, is a mere fraction of the 7-8 Mt typically exported by Qatar in a standard month. Maritime trackers reported just five LNG carriers transited the Strait between 22 April and 7 May.

The fundamental issue is one of industrial inertia. Qatar’s massive Ras Laffan production complex is not a tap that can be turned on at a moment’s notice.

For Asia — the centre of global gas demand growth and LNG infrastructure investment — the implications are especially acute. A full operational restart requires multiple weeks of technical lead time. Furthermore, the spectre of permanent infrastructure damage remains; even in a best-case scenario, QatarEnergy may be looking at a 17% capacity reduction, with only 12 of its 14 liquefaction trains currently viable. For an industry built on the principle of reliable, high-volume energy addition, this level of impairment is a significant blow to global energy security.

Market floors and the Hormuz premium

Beyond the physical production, the economics of transit through the Strait of Hormuz have fundamentally shifted. Even the possibility of additional transit costs through the Strait of Hormuz has injected a new geopolitical risk premium into LNG pricing, with estimates of tolls as high as $2 million per passage adding roughly $0.50/MMBtu to cargo costs, creating a new friction-heavy environment. When compared to the standard $1.50/MMBtu cost for a 28-day journey to Europe, this geopolitical security premium is a substantial addition for the industry if it plays out.

While ICIS TTF gas prices retreated towards the pre-war €30–32/MWh range (the 52-week low was €26.53) before settling around €46/MWh in mid-May, any geopolitical tax on Hormuz transit will lead to cheap gas becoming a thing of the past. This pullback reflects short-term positioning rather than a resolution of underlying supply risks.

A 150 TWh reduction in gas-to-power demand for the remainder of 2026 was previously estimated due to high prices; should prices stabilise at lower levels, a strong power sector reaction in Europe could quickly absorb the surplus.

Against that context, the industry is looking forward with a sense of energy realism. The initial two-week peace deal, for instance, was too brief to resume critical work on the North Field East (NFE) expansion. 

The Asian gas equation

Before the conflict, Gulf producers collectively supplied almost a fifth of global LNG. Long-term constraints risk major shocks to Asian customers, as several countries are heavily dependent on those imports. As supply rapidly leapt from surplus to shortage, Asia’s stock markets have repeatedly fallen.

The EIA said 83% of LNG shipped through the Strait in 2024 went to Asian markets: China, India, Japan, and South Korea, accounting for 59%. “This conflict highlights that oil and gas supply chains are inherently unreliable and vulnerable to geopolitical instability,” said Zero Carbon Analytics. “Of all commodities, LNG is the most exposed to geopolitical shocks, with conflicts magnifying inherent volatility.”

"Now everything is up in the air, growth in energy supply in 2026 is going to be much lower than everybody expects. If the crisis extends, there might be a point at which there is no growth at all."

- Anne-Sophie Corbeau
Global Research Scholar at the Center on Global Energy Policy (CGEP) at Columbia University and Co-Chair of the Gastech Governing Body

Before the current escalation, regional assumptions about long-term gas demand were built on an expectation of ample and reliably traded LNG supply. All of this challenges Asia Natural Gas & Energy Association’s prediction that Asia Pacific natural gas use would more than double by 2050. LNG consumption in the region increased by 35% between 2015 and 2023 (Ember Energy).

Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie, cites a 6.5 million-tonne-per-month loss in Gulf export volumes. “The maths is simple,” he said. “No Gulf exports beyond four or five months will mean annual LNG supply falls, upward pressure on prices through 2026 and demand destruction, particularly in Asia.”

"No Gulf exports beyond four or five months will mean annual LNG supply falls, upward pressure on prices through 2026 and demand destruction, particularly in Asia."

- Simon Flowers
Chairman and Chief Analyst, Wood Mackenzie
and Gastech Executive Committee Member

Anne-Sophie Corbeau, Global Research Scholar at the Center on Global Energy Policy (CGEP) at Columbia University, says a price drop was expected possibly this year, based on additional LNG due in 2026 and 2027. “Now everything is up in the air,” she said. “Growth in energy supply in 2026 is going to be much lower than everybody expects. If the crisis extends, there might be a point at which there is no growth at all.” 

Short-term constraints and market responses

Conflict has again sharpened attention on the geopolitical and energy security implications of LNG production and transit. Asian buyers have been scrambling to manage the shortage. Consultancies such as S&P Global Energy have cut global supply forecasts by up to 35 million tonnes — roughly 500 cargoes.

One response has seen European importers outbid, leading to supplies being redirected to Asia. This again reveals Europe›s vulnerability, which sought to diversify away from Russian gas but is now exposed to reliance on imported LNG, much of it from the Gulf.

Governments and companies confronting uncomfortable realities are potentially rethinking energy security doctrines to maintain economies and growth.

In some Asian states, particularly China and India, fossil fuels such as coal could prove critical for short-term energy security.

Of all commodities LNG is the most exposed to geopolitical shocks, with conflicts magnifying inherent volatility.

In the medium to longer term, buyers may need to reassess the balance between price and the security of LNG supply. For example, Australian LNG costs more but offers shorter, less volatile shipping passage to Southeast Asia. However, existing project production is mostly already contracted (Norton Rose Fulbright). Meanwhile, multiple Asian countries competing simultaneously for limited alternative cargoes push spot prices higher.

In a market now defined by absolute scarcity rather than elasticity, even modest volumes have an outsized influence on price formation. Flowers explains that 3.5b cubic feet per day could be added, mainly from the most LNG import-dependent producers. “This is only 0.8% of global supply, but more crucially, it is 30% of the LNG curtailed in Qatar,” he said. “The gain is not enough to prevent serious price consequences, but enough to potentially soften some of the blow.”

Diversifying supply and reducing exposure

Trends first accelerated by Russia's invasion of Ukraine are now being stress-tested by renewed instability in the Middle East. 

Disruption caused by Russia’s war with Ukraine prompted new LNG projects, mainly in the US. Wood Mackenzie says these could add 35 million tonnes to global supply this year (an 8% increase).

The US was the world's largest LNG exporter in 2023, according to the Reuters, and India's third-largest LNG supplier last year. 

Gas supply disruptions have prompted Pakistan's government to look to coal, hydropower, and nuclear power, while price volatility and shipping uncertainty are likely to sharply increase power costs in Bangladesh, raising subsidy requirements and increasing the likelihood of load shedding and reduced industrial supply.

In a market now defined by absolute scarcity rather than elasticity, even modest volumes have an outsized influence on price formation.

Singapore commissioned an LNG terminal and is developing a second to expand regasification capacity and reduce exposure to supply disruptions. However, this heightens sensitivity to global LNG prices.

At least one report suggests Japan may now ramp up coal-fired power generation amid an LNG crunch.

Alternatives for South Asian and Southeast Asian LNG buyers include Papua New Guinea, Indonesia, Malaysia, and Brunei, offering regional proximity, existing infrastructure and trading history. Barriers include limited spare capacity, declining production in some legacy fields, and competition with domestic demand.

Canadian West Coast LNG offers direct access across the Pacific and a stable regulatory environment. However, near-term volumes are limited. 

• This Market Outlook report was produced for Gastech. For more information and to register as a delegate, visit Gastech Bangkok 2026.

Speaking at the St Petersburg International Economic Forum, H.E. Al Ghais said OPEC was maintaining its forecast for oil demand growth of 1.2 million barrels per day this year, despite heightened tensions in the Middle East and concerns surrounding the Strait of Hormuz, which has greatly limited the movement of oil and gas supplies. “Despite all the commentary out there that oil demand is declining, we have not registered signs of that yet,” he said, adding that OPEC continues to see robust growth in global consumption.

H.E. Al Ghais’s comments come at a time when the energy markets are navigating an increasingly complex landscape. Escalating geopolitical tensions, uncertainty over global economic growth and accelerating energy transition policies have fuelled debate over the future trajectory of oil demand. But OPEC remains convinced that oil consumption growth will continue in the years ahead.

The organisation’s position is consistent with a message the OPEC Secretary General has emphasised in previous interviews with Energy Connects: that the world will continue to require significant volumes of oil and gas for decades, even as renewable energy capacity is expanding.

Investment remains critical

A central theme of H.E. Al Ghais’s remarks was the need for continued investment across the oil industry. He warned that short-term geopolitical events should not distract policymakers and investors from the longer-term challenge of ensuring adequate supply. He projected that oil would retain 30% of the energy mix leading up to 2050, and that the oil and gas industry would need $7 billion a year in investments. 

The issue has become a recurring concern for OPEC. The organisation has consistently argued that underinvestment in projects risks creating supply shortages in the future, while increasing market volatility. 

OPEC raises output for fourth consecutive month

H.E. Al Ghais described regional conflicts and disruptions as “one-off events” that should not alter long-term investment strategies. His comments reflect OPEC’s broader view that investment decisions should be guided by structural demand trends rather than temporary market shocks.

At the 41st OPEC and non-OPEC Ministerial Meeting, members reaffirmed their objectives to sustain a stable oil market. To achieve this, seven OPEC+ members, which include Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman, are increasing output to the tune of 188 thousand barrels per day, with production scheduled to begin in July 2026. 

Unsurprisingly, the biggest production increments will come from Saudi Arabia and Russia, which will increase supply by 62 kilobarrels per day each. 

In a press statement, the members said they will meet again on 5 July to review market conditions and oil production levels. 

Although OPEC remains bullish, not all industry commentators share its optimism. Some analysts have pointed to weaker industrial activity in China, reduced refinery margins and slower economic growth in parts of Europe as indicators that oil demand growth could slow. 

Demand outlook 

However, major forecasting agencies continue to project consumption growth, albeit at different rates. The US Energy Information Administration (EIA), for example, projected oil demand to grow by an average of 200,000 barrels per day this year. This is down from the EIA’s projection of 1.2 million barrels per day in its February outlook. The International Energy Agency, on the other hand, said in its May 2026 outlook that global oil demand would contract by 1.3 million barrels per day less than their pre-war forecast.

OPEC's desire for ongoing investment is directly related to its ability to retain confidence in future demand. H.E. Al Ghais contends that maintaining sufficient oil supplies is still crucial for both energy security and economic stability as the world's energy demand increases. “We need to invest well ahead of time to be prepared for the demand that we see in the future,” he said.

Digital engineering unifies high‑fidelity multiphysics simulation, system modelling, artificial intelligence (AI)‑enhanced analytics, and digital twins across the full asset life cycle. This approach creates a continuous digital thread between design, operations, and maintenance — turning engineering insights into data-driven decisions.

Why digital engineering, and why now?

The oil and gas industry faces a new generation of challenges that exceed the capabilities of traditional engineering processes. Assets are becoming increasingly complex, with interdependent mechanical, thermal, fluid, electronic, and control-system behaviours that cannot be accurately evaluated using isolated tools. This complexity is particularly evident in deepwater systems, liquified natural gas (LNG) infrastructure, electrified and automated production environments, and integrated subsea–surface architectures. As a result, organisations must adopt methods capable of capturing system-wide interactions early in development.

At the same time, uptime remains a critical executive-level metric because even a brief interruption in operations can lead to dramatic revenue losses, heightened safety risks, and cascading supply chain disruption. Simulation-powered digital engineering provides the ability to detect failures earlier, analyse issues more thoroughly, and model a full range of “what-if” scenarios before a change is made in the field. This makes it possible to convert reactive maintenance into predictive strategies, strengthening reliability while reducing downtime and operational costs.

Finally, market pressures are forcing companies to deliver projects faster and more efficiently. Budgets are tightening, energy transition goals are accelerating, and competitive dynamics demand rapid innovation. Digital engineering enables organisations to reduce physical prototyping, streamline engineering workflows, and evaluate far more design variations in less time. Together, these conditions make digital engineering not simply advantageous but essential for competitiveness and long-term resilience.

The role of AI, reduced-order models, and GPUs

AI is reshaping engineering by dramatically accelerating analysis and enabling predictions that were previously too slow or costly to compute. AI models trained on simulation results and field data provide immediate insights into system behaviour, enabling engineers to evaluate performance trends, identify operational anomalies, and optimise designs in near real time. When physics-based simulation is combined with machine learning, organisations can use hybrid models that retain the accuracy of high-fidelity solvers while delivering the speed necessary for operational decision-making.

Reduced-order models (ROMs) extend these benefits by transforming detailed multiphysics simulations into lightweight representations that run in seconds. These models preserve essential physics while enabling rapid scenario testing, real-time digital twin execution, and deployment in the cloud. ROMs are particularly valuable for operators who must assess system stability, evaluate degradation, or test process upsets without relying on computationally intensive full-order simulations.

Solvers accelerated with graphics processing units (GPUs) further unlock new engineering possibilities by drastically reducing simulation runtimes. Workflows that once required hours on CPU-based systems can now be completed in minutes using modern GPU architectures. This performance boost enables engineers to run larger meshes, more detailed multiphysics models, and more extensive design explorations without compromising accuracy.

Together, AI, ROMs, and GPU acceleration make rigorous, high-fidelity analysis scalable and operationally relevant.

A path forward for the industry

As companies face economic uncertainty, shifting energy policies, and ongoing pressure to optimise production, simulation-powered digital engineering provides a unified framework for designing systems, validating performance, and responding to operational

changes with greater confidence and speed. Organisations that adopt these capabilities gain the ability to predict failures before they occur, optimise asset life, and orchestrate decision-making using accurate, data-driven insights.

The oil market possibly sees this conflict balance as being once again on the testbed and reacts accordingly with nervousness. Beyond the geopolitical noise, the oil market proves resilient and digests the supply shock well for now. Several vessels transited Hormuz over the weekend. We sense a greater degree of trade pragmatism, mirrored in the different bilateral deals concluded between Gulf-locked sellers and mostly Asian buyers within Iran.

Transits growing over time

The current hostilities likely lift hesitance in the short term, but the common interests, and especially the profit opportunity, should keep these transits growing over time. Oil tends to find its way from sellers to buyers over time, especially when prices are elevated. The oil market’s deficit is closer to 5% than to 10%, thanks to the partial Hormuz flows, the alternative routes, and some demand curtailment, which provide breathing room to deal with the trade disruption with oil supplied from storage until late this year.

While a lasting trade disruption remains the bear scenario, our base case is a gradual easing, following similar dynamics to the early 80s, likely spiced up by some eventual US-Iran dealmaking. Today’s hostilities threaten the past weeks’ conflict balance due to the risks that come with hot-headed politics and the fact that the latest hostilities challenge the US-Israel alliance. While we are keeping a close eye on this, we stick to our cautious view and see oil prices heading lower beyond the summer.

Seven nations led by Saudi Arabia and Russia will raise their collective target by 188,000 barrels a day next month, continuing the process — if only on paper — of restarting production halted several years ago, the Organization of the Petroleum Exporting Countries said in a statement on Sunday after a video conference. 

With the Strait of Hormuz largely closed by the Iran war and Middle East producers forced to cut output, the OPEC+ decision remains theoretical for the time being. It could become relevant again when the waterway reopens, with buyers clamoring for barrels to replenish the world’s depleted oil inventories.

“At this stage we are basically talking about hypothetical future scenarios with the bulk of the barrels stranded,” said Helima Croft, head of commodity-markets strategy at RBC Capital Markets LLC.

While Russian shipments aren’t directly affected by the war, its crude production has also been challenged, falling to a 10-month low in May as Ukraine intensified strikes on its oil infrastructure.

A surge in US supply and diminished Chinese buying have prevented crude oil prices from spiraling out of control so far, though fuels such as gasoline, diesel and jet fuel have nevertheless surged during the conflict. 

That’s squeezing consumers worldwide and heightening the risk of an economic downturn. Still, markets haven’t rallied as much as feared while China dials back imports, major consumers tap emergency stockpiles and US President Donald Trump repeatedly signals an imminent peace deal.

The seven OPEC+ nations engaged in monthly quota adjustments will next meet on July 5. Besides the Saudis and Russia, they consist of Iraq, Kuwait, Kazakhstan, Algeria and Oman.

The UAE announced its departure from the organization effective May 1, ending six decades of membership. Abu Dhabi had long been frustrated that OPEC’s quotas prevented it from deploying new investments in production capacity.

For most of the past year, key OPEC+ nations had been restoring output halted several years ago, when the alliance was trying to stave off a surplus and shore up prices. They’ve continued the process since the war started, even though the conflict prevents many of them from raising production. 

With the quota increase for July, the group will have nominally restored almost 90% of two layers of production halted in 2023. Last month, delegates said the group had a plan to complete that chunk with increases from July to September. Those supplies amounted to 3.85 million barrels a day at the time, though the volume has been reduced slightly as a result of the UAE’s exit.

A third layer, which equated to 2 million barrels a day when it was taken offline in 2022, is due to remain shut down until the end of year. Delegates said last week it could be fast-tracked, but even then most of the oil wouldn’t materialize. 

Pledged supply increases over the past year have fallen significantly short of the advertised amounts as a combination of under-investment, aging oil fields and sanctions have eroded production capacity in many OPEC+ members. 

The full OPEC+ coalition, which now comprises 21 countries following the UAE’s departure, will hold its next ministerial meeting on Nov. 29.

©2026 Bloomberg L.P.