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Hello readers,
February 2026 was another month of chaos as the world’s petrostates (yep, many analysts argue that the US is now part of that grouping) fought among themselves. After capturing Venezuelan leader Nicolas Maduro in January, the US threatened his successor, saying she must create an enabling environment for American oil and gas companies, or “pay a very big price”. Then, in late February, the Trump administration launched a war against Iran that killed the country’s Supreme Leader, Ali Khamenei. Iran responded by all but closing the Strait of Hormuz and attacking its neighbours, including via strikes against major oil and gas infrastructure in Saudi Arabia, Qatar and elsewhere.
The war is yet another blow to countries that rely on imported oil and gas, but is a boon for fossil fuel exporters in the US and Russia. Ominously, the two countries could band together to champion oil and gas if a new proposal from the Kremlin has any legs.
If there’s a silver lining, however, it’s that the case for switching from foreign fuels to clean local electrons is stronger than ever.
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Thanks,
Nick Hedley
Oil and gas in the transition
The chaos economy
With war engulfing the Middle East, the price of Brent crude oil surged over 10% to around $80 a barrel in the first two trading days of March. European natural gas futures nearly doubled over the same period after QatarEnergy, the world’s largest LNG producer, was forced to halt production due to Iranian drone strikes on its facilities. The state-owned company accounts for nearly 20% of global LNG trade, with most of its shipments going to Asia.
The extreme price spikes are “yet another reminder that having an economy reliant on imports of oil and gas is not a great idea,” Ember analyst Paweł Czyżak said in a post. “Supplies of fossil fuels can be disrupted literally over one weekend, or be leveraged for political blackmail.”
The world’s oil cartel, OPEC+, responded to the Gulf crisis by agreeing to a production increase of 206,000 barrels per day for April. That should cushion the blow slightly, but is no long-term solution given that the Strait of Hormuz handles around a fifth of the world’s oil and LNG supply. Japan is particularly vulnerable to supply disruptions as a high share of its imported oil and gas flows through the key shipping route. So too are other Asian countries. For its part, Thailand has suspended petroleum exports to bolster domestic reserves, which currently stand at 61 days’ worth of supply.
Winners and losers
One of the key beneficiaries of the chaos will be Vladimir Putin, who stands to gain from higher oil prices and greater demand for sanctioned Russian crude, writes Bloomberg columnist Javier Blas. Putin’s economic cooperation envoy Kirill Dmitriev could barely contain his excitement, posting: “$100+ a barrel soon”.
US LNG producers will also benefit as Europe, Asia, and other regions scramble for alternative sources of the (now more expensive) fuel. Less than two weeks before the strikes on Iran, the Export-Import Bank of the US approved a USD 400 million deal to support American LNG exports to Türkiye, as part of the Trump administration’s “energy dominance” agenda.
But while multinational fossil fuel companies and their shareholders gear up for a bonanza, American consumers, like their counterparts elsewhere, stand to lose. If oil prices remain elevated, fuel prices and inflation will rise, which could keep borrowing costs high as well. As was the case in recent energy crises, oil and gas groups will cash in as ordinary citizens feel the pinch.
Perhaps there are lessons to be learned from Cuba, which is pivoting to electric mobility amid fuel shortages sparked by US efforts to cut off the nation’s oil supplies.
Movers and shakers (for the status quo)
It’s no wonder, then, that Japanese LNG companies have been intensively lobbying Australian government officials to secure favourable policies that “prolong the life of the industry and slow a shift to clean energy in the Asia-Pacific”, per a report by the Guardian detailing research by Influence Map.
In a similar vein, Germany’s government has caved to pressure and agreed to abolish a ban on new gas and oil heating systems. The ban could have led to a 15% reduction in heating emissions from 2026 to 2029, according to BloombergNEF estimates. Just as importantly, it could have helped shield households from global gas supply disruptions. Given the current situation, this seems a particularly short-sighted move.
Meanwhile, the UK Treasury is considering ending the windfall tax on North Sea oil and gas “following persistent pushback from producers,” per a Bloomberg report.
Insurers say no
With Iran threatening to attack ships that traverse the Strait of Hormuz, many of the world’s largest maritime insurers are ditching war-risk cover for vessels entering the Persian Gulf. Shipping companies can turn to other insurers, but they’ll have to pay 12-times more for coverage. Trump has promised that the US will act as a backup insurer for shipping companies and that his military will escort commercial vessels through the Strait. But those assurances do not appear to have allayed market fears.
This comes just a few weeks after Munich Re tightened its policies for the oil and gas sector. The world’s second-largest reinsurer says it will no longer support new LNG terminals that are directly connected to new gas fields. It previously terminated coverage for new oil and gas fields and new oil-fired power plants.
Energy transition strategies
In its latest quarterly report, Shell barely mentioned clean energy or decarbonisation amid waning pressure to act on climate. The company reported its renewable energy pipeline shrunk to 1.9 gigawatts (GW) of renewables under construction and/or committed for sale, down from 2.6 GW in the previous quarter.
BP is suspending share buybacks to strengthen its balance sheet as it shifts its focus back to fossil fuels. “This creates a strong platform to invest with discipline into our distinctive deep hopper of oil and gas opportunities,” the group told investors.
TotalEnergies has signed a preliminary agreement with Glenfarne, the lead developer of the controversial Alaska LNG project, for the long-term offtake of 2 million tons per year of LNG over 20 years. If the project goes ahead, the fuel will be shipped to Asia. TotalEnergies said this would offer “a reliable solution for Asia’s energy security”, a sentiment that was overtaken by the gas market meltdown that began just days later.
Meanwhile, the company is facing a lawsuit in France, where judges will decide if it must curb its production of fossil fuels in line with its obligations to prevent environmental harms.
That may partly explain why TotalEnergies is not jumping at the opportunity to invest in Venezuela, where the industry’s oil and gas emissions are particularly high. “It does not fit as well … with our commitment to produce with less emissions,” CEO Patrick Pouyanné said at a recent event. To be fair to the company, it is now one of the few oil and gas groups still talking about climate impacts, even as it casts its exploration net wider in Africa.
ConocoPhillips and other groups that lost billions of dollars after Venezuela nationalised its oil industry in the 1970s might get some compensation now that the US is effectively running the show, according to Bloomberg. If anyone needs some extra cash right now, it is oil and gas groups, of course.
Following a petition by ExxonMobil and Canada’s Suncor, the US Supreme Court has agreed to hear a lawsuit in which the oil industry is seeking to be shielded from climate cases in state courts. ExxonMobil is also lobbying against European Union rules intended to curb emissions of methane.
Chevron has signed an agreement with the government of Türkiye to jointly explore for oil and gas around the world.
Oil trading giant Vitol Group says oil demand will take longer to peak than previously expected as countries prioritise growth and energy security. Consumption will reach a high of around 112 million barrels a day at some time in the mid-2030s, it claims.
Clean energy investments
TotalEnergies says it will deliver 1 GW of solar capacity to Google’s data centres in Texas. Construction on the solar facilities will begin in the second quarter of 2026, according to company statements.
Norway’s Equinor has cancelled plans to make hydrogen from natural gas with carbon capture and storage in the Netherlands owing to “policy uncertainty and lack of funding.” (But it still plans to push ahead with a similar project in Belgium.)
In another sign of the times, BP has sold its solar and storage portfolio in Australia to Aula Energy, the renewables offshoot of finance group Macquarie.
