Energy

1. ‘Near completion’
2. Hormuz work-arounds
3. Widening rifts in Europe
4. Chevron, Microsoft team up
5. Shell eyes Venezuelan gas

US LNG exports hit a record, and Moscow pockets a windfall from grain, aluminium, and fertilizers.

While the daily oil price jumps up and down in response to rhetoric from US President Donald Trump or from myriad battlefield updates, there are a few key data points to watch out for to understand the real state of the energy market.

Trump’s televised address Wednesday night didn’t offer much clarity about when or how the war will end. And it left open the possibility that the US could withdraw its forces without necessarily reopening the Strait of Hormuz. That’s a scary prospect for oil and gas importers, and seems to leave Iran with even more leverage over the global economy than it had before the war.

Nakul Sarda, founder of the India-based investment advisory ProfitGate, offered some useful advice: Tune out the headlines (not counting Semafor’s, of course), and focus on facts about tanker movement through the strait. That includes insurance premiums — up from about 0.25% of a ship’s value before the war, to around 6% now — and the actual number of ships passing through the waterway daily, which is now about a dozen compared to more than 100 before the war. He helpfully built a public dashboard with some of this data.

Another important, and possibly more reassuring, signal is the far end of oil price futures. Crude oil to be delivered in December 2028 is now about $66 per barrel, a bit higher than it was before the war but a good 40% below the price for deliveries today. That’s a sign traders expect a return to something like normal in the next couple of years, which is nice but not exactly helpful for consumers or for US politicians panicking about gasoline prices ahead of the midterm elections.

In the meantime, expect more turmoil: April “will be much worse than March,” International Energy Agency chief Fatih Birol warned this week.

‘Near completion’

Oil prices surged to more than $108 a barrel after US President Donald Trump offered an unclear timeline for ending the war in Iran, and equivocated on whether reopening the Strait of Hormuz is a key US military objective.

In his first prime-time televised address on the conflict, Trump reiterated familiar talking points about his “core objectives” in the war being “near completion,” while announcing that the US will hit Iran “extremely hard over the next two to three weeks.” Trump also reiterated his threats that he would target the country’s power plants if no deal was reached with Tehran. In response, a spokesperson for the Iranian military warned of incoming “crushing, broader, and destructive” attacks.

In his speech, Trump called on allies to “build up the courage” and take the lead on reopening the strait, claiming the US doesn’t need access to it. He earlier lashed out at allies for not supporting the US in the war and said he was strongly considering pulling out of NATO: “I was never swayed by NATO. I always knew they were a paper tiger” Trump told The Telegraph. Meanwhile, the UK will host a meeting today of 35 nations (excluding the US) to discuss safe passage through the strait.

Hormuz work-arounds

For decades, Iran’s threats to close the Strait of Hormuz if attacked were largely ignored. Saudi Arabia and the UAE invested years ago in pipelines that allow part of their crude exports to bypass the chokepoint, but Bahrain, Kuwait, and Qatar remained trapped by geography. Now there is momentum behind new rail links and pipelines, though neither offers a quick fix. Saudi Arabia launched a 1,700-kilometer rail logistics corridor linking Dammam and Jubail ports to Jordan. The route can carry trains with more than 400 containers each, part of a broader effort to redirect trade north.

Longer term, shifting trade routes for oil, gas, and other commodities will require pipelines. Tom Barrack, the US ambassador to Türkiye, said regional rivalries and security threats have long prevented cross-border energy pipelines. But in a presentation in Washington last week, he argued those obstacles could be overcome with a network through Syria, which is no longer under Iranian control. Even Israeli Prime Minister Benjamin Netanyahu wants a piece of the action, although an Israeli route may be unpalatable to many countries in the region that blame Israel for helping spark the war.

— Mohammed Sergie

Widening rifts in Europe

The deepening energy crisis triggered by the US-Israel war with Iran has thrust energy security back onto the political stage in European countries — and widened fault lines along with it.

In the UK — which is particularly vulnerable because of its imports of gas, and which suffered hefty price rises following Russia’s 2022 invasion of Ukraine — attention this time has shifted from diversifying supply away from single countries to a broader push to move beyond fossil fuels, said Annabel Rice, a senior political adviser at the Green Alliance, a London-based think tank. Or at least, that’s the takeaway the governing Labour Party seems to have settled on, casting renewables as more insulated to oil price shocks.

France is similarly leaning towards reducing reliance on hydrocarbons. The country’s prime minister has tasked his cabinet with identifying priority actions to electrify the economy. Others in Europe, such as Italy, have so far opted to double down on fossil fuels to cushion the blow from surging electricity bills. The UK’s opposition Conservative Party is pitching a similar idea, launching a “Get Britain Drilling” campaign this week, pressing to reverse the country’s ban on North Sea oil and gas licenses and claiming it would cut bills significantly.

— Natasha Bracken

Chevron and Microsoft team up

Gigawatts of power that will be generated from a proposed new gas-fired power plant to supply a Microsoft data center in Texas. The project, which will cost about $7 billion to build, will be a joint venture between Microsoft, Chevron, and the investment firm Engine No. 1. Chevron announced plans last year to branch out into generating power for data centers, making use of its access to low-cost gas from its drilling operations in the Permian Basin, but had not previously disclosed which tech companies it would contract with as buyers. Commercial terms for the project have not yet been finalized, a Chevron spokesperson said.

At the end of her tenure as CEO of GSK, Dame Emma Walmsley is clear-eyed about what the job required. On this week’s episode of The CEO Signal, co-hosts Penny Pritzker and Andrew Edgecliffe-Johnson spoke with Walmsley late last year, just as she was preparing to step down as CEO of GSK after planning her own succession.

After more than a decade leading one of the world’s largest pharmaceutical companies through significant change, reshaping its strategy and structure, and navigating activist campaigns, she reflects on what the job actually demands and how that understanding evolves over time.

Hear what she has to say and more on The CEO Signal — watch the full conversation now.

Shell eyes Venezuelan gas

Energy giant Shell is in talks with Venezuela to develop gas fields off the country’s coast, the latest sign of increased investor appetite in the country. Venezuela’s oil production remains far below its 1990s peak despite having the world’s biggest crude reserves. Still, investors are feeling bullish as the country begins to show some signs of stability. Oil exports have jumped since Washington ousted its former president in January and lifted restrictions on the sector, reeling from years of mismanagement and underinvestment. “The recovery in Venezuela won’t happen in a year or two. It could take a while,” a Colombian investor told The Wall Street Journal. “So it’s an opportune time.”

New Energy

• TotalEnergies and Masdar formed a $2.2 billion joint venture to consolidate their renewable energy assets in Asia.
• Prosecutors in Texas are going after a recycling company they say illegally dumped thousands of used wind turbine blades in a field.

Fossil Fuels

• Saudi Arabia’s oil exports fell by 50% after Iran’s effective closure of the Strait of Hormuz forced the kingdom to divert crude from Gulf export terminals into the East-West pipeline to Yanbu.
  

• China’s state-run oil and gas giants are delaying expansion plans as they weigh market turmoil against the country’s longer-term energy security goals.
• India is set to experience higher-than-normal heatwave days in June, raising the possibility of power shortages as the government expects a surge in electricity demand on top of energy strains from the Iran war.
• LNG exports from the US hit a record high in March, with many terminals running above their nameplate capacity to capture a windfall from the war in Iran.

Finance

• Some fund managers are dodging the turmoil in private credit markets by sticking to hard energy assets, and eschewing software and AI.

Politics & Policy

• The EU is weighing reviving energy crisis measures it implemented after Russia’s invasion of Ukraine, namely curbing grid tariffs and taxes on electricity. A growing number of countries worldwide are implementing measures to ration energy.
• Meanwhile, Russia seems poised to gain from the Iran war as surging prices for oil, gas, grain, aluminium, and fertilizers are creating additional revenues for Moscow.

Minerals & Mining

• The US is expected to overhaul its tariffs on steel and aluminum in a way that could significantly raise the cost of imports.