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Hello readers,
I took over this newsletter just three months ago, but am already running out of superlatives to describe the state of the global oil and gas market (and the world). We are now in the midst of the biggest oil shock in history after the US and Israel attacked Iran, and the latter responded by all but closing the Strait of Hormuz.
The crisis has laid bare the fragility of fossil fuel supply chains, and shown once again how vulnerable most countries are to disruptions. For the next few months, oil and gas companies, Iran, and Russia will profit from surging prices while ordinary citizens see their disposable incomes fall. However, over the longer term, there is already plenty of evidence that the great oil and gas reckoning of 2026 will speed up the energy transition as nations seek to reduce their reliance on volatile fuels.
Please share this newsletter with your colleagues and contacts, who can subscribe here.
Thanks,
Nick Hedley
Oil and gas in the transition
Winners and losers
The energy crisis sparked by the Iran war is driving up living costs across the planet – but not everyone is in the same boat. In the conflict’s first month, more than USD 100 billion “has been siphoned from ordinary people to oil and gas companies due to soaring energy prices,” according to an analysis by 350.org.
Producers see income grow
TotalEnergies hoovered up huge volumes of Middle Eastern oil in March, sending crude prices even higher. And the company made more than USD 1 billion from these trades alone, according to the Financial Times.
Russia’s oil export revenues have reached the highest level in four years thanks to elevated prices and sanction waivers. The earnings boost is helping to fund the war on Ukraine.
US President Donald Trump, meanwhile, said “we make a lot of money” when oil and gas prices surge, thanks to the country’s fuel exports. Trump is using Europe’s dependence on imported gas as leverage in his ongoing trade negotiations with the bloc.
Having all but shut the Strait of Hormuz to other nations, Iran is also benefiting from higher oil earnings. “Iran is now earning nearly twice as much from oil sales each day as it did before American and Israeli bombs started falling on February 28th,” according to The Economist. However, Trump says the US could seize the country’s oil supplies.
Governments and consumers pay the price
On the other side of the coin, policymakers across the world are scrambling to contain the fallout. In the US, average gasoline prices rose 35% in just one month, prompting authorities to consider a temporary suspension of the federal gasoline tax.
In Australia, the national government has halved the nation’s fuel excise tax for the next three months, while two states have made public transport free. Lower-income countries do not have as much fiscal room to manoeuvre, but are taking drastic actions in any case. The Philippines, for example, has declared a national energy emergency, while Thai farmers are considering whether they can plant their next crops if there’s no fuel.
As the world’s petrostates fight amongst themselves, unleashing another economic crisis, consumers everywhere are bracing for rising transport costs, higher food prices, and potentially higher interest rates as well.
According to calculations by the Atlantic Council, the 11 countries that are in the midst of major global conflicts account for 51% of global crude oil production and 56% of gas production.
These wars are damaging energy infrastructure. In the Middle East alone, more than 40 energy assets have been “severely or very severely” damaged by the war, says International Energy Agency (IEA) executive director Fatih Birol. To partially mitigate the impact, IEA member states agreed to release 400 million barrels from their strategic oil stockpiles.
A faster energy transition beckons in response
Oil and gas groups may be generating windfall profits for now, but there is growing evidence that the second global energy crisis in just four years will accelerate the shift from fossil fuels.
In Vietnam, Vingroup wants to scrap a plan to build the country’s largest gas-fired power plant and develop a renewable energy project instead, since imported LNG is becoming too expensive. Elsewhere in the region, the Philippines is looking to fast-track renewable energy projects, while South Korea’s president says his country “needs to transition to renewable energy quickly” to avert future crises.
Consumers are leading the way. Electric car manufacturer BYD’s showrooms in Southeast Asia have never been busier, while electric rickshaws are selling out in Pakistan and interest in electric stoves is soaring in India, Bloomberg reported. “From Germany to Nigeria, interest in rooftop solar is surging,” the newswire wrote, adding that homeowners in the UK are switching to heat pumps as well.
“Our forecast model shows that when there is heightened focus on energy security, the pace of the global energy transition speeds up,” DNV energy transition researchers wrote in a new note. “That is because the net effect of energy security policies globally favours renewables, batteries, nuclear, and energy efficiency.”
But things may get worse before they get better
Things could move even faster if the crisis deepens. According to analysts at Macquarie Group, oil could reach a record high of USD 200 per barrel if the Middle East war drags on until June and the Strait of Hormuz remains shut.
“We continue to believe that USD 150 per barrel for Brent, and perhaps even higher, is increasingly probable in the coming months,” Wood Mackenzie says.
Energy transition strategies
TotalEnergies has abandoned its target to reach net zero emissions by 2050, saying the energy transition is moving too slowly. The company also agreed to a controversial deal with the Trump administration, which will pay it USD 1 billion to ditch its offshore wind projects in the US and instead focus on fossil gas investments there.
In another sign of the transition slowing, BP’s head of EV charging is leaving the group at a time when the British multinational pivots fast back to oil and gas. The company is moving ahead with its first new oil project in the Gulf of Mexico since the deadly 2010 Deepwater Horizon disaster. Its new chief executive, Meg O’Neill, who came into post on 1 April, is a staunch defender of fossil fuels.
Ignoring environmental and climate concerns, Shell and ExxonMobil, among others, secured drilling leases in northern Alaska’s huge petroleum reserve.
As they move back to fossil fuels, oil and gas giants have been accused of “climate gaslighting” in a new report by advocacy group Clean Creatives.
Clean energy investments
BP and Iberdrola say their 25-MW green hydrogen project in Spain is nearly complete.
TotalEnergies has sold a 50% stake in German battery storage projects as its about-turn on clean energy accelerates.
This section of the newsletter is a short read these days, and for good reason. “The world’s largest oil and gas companies ratcheted back investment in the energy transition in 2025, marking the first annual decline in eight years,” according to BloombergNEF.
From Zero Carbon Analytics
Clean energy is shielding the European Union from the worst of the fossil fuel crisis, according to an analysis by Zero Carbon Analytics. Without the growth in wind and solar output between 2022 and 2025, the EU would have spent an additional EUR 58 billion on coal and gas imports for power generation.
Bangladesh’s annual fossil fuel import bill could rise by USD 4.8 billion, a 40% increase from 2025 levels and equivalent to 1.1% of GDP, if oil, gas and coal prices remain elevated. The funds spent absorbing volatile prices are a missed opportunity for the country to finance renewable energy, which would insulate it from future crises.
