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On Qatari aluminum, floating offshore wind, and Taiwanese nuclear
The attacks on Iran have not redounded to renewables’ benefit. Here are three reasons why.
In this special edition of Shift Key, Rob talks to Eurasia Group’s Gregory Brew about how the U.S.-Israeli-led conflict will reshape global energy markets.
The U.S.-Israeli campaign will have, if anything, bigger implications for liquified natural gas.
Current conditions: Springlike weather is bringing rain from Texas to Michigan • A Saharan dust storm known as a calima is headed for Europe, threatening “blood rain” as far north as Luxembourg • The Greenlandic capital of Nuuk is poised for days of snow, but with limited accumulation.
Smoke billows from a missile strike in Tehran. Fatemeh Bahrami/Anadolu via Getty Images
The aerial assault the United States and Israel launched on Iran this past weekend is already sending oil prices upward. By Sunday evening, the price for West Texas Intermediate crude, the benchmark for the oil drilled in the U.S., had risen 2.78% to just over $67 per barrel. Brent crude, the benchmark typically used to measure Europe’s production, 2.87% to nearly $73 per barrel. Murban crude, the benchmark set out of Abu Dhabi, surged by more than 4% to north of $74. By rendering the Strait of Hormuz — the waterway between the United Arab Emirates and Iran through which 15% of global oil flows and which tapers to just 20 miles wide at its narrowest point — impassable, the conflict could send prices per barrel as high as $100 or more, the consultancy Wood Mackenzie warned Sunday night. “The key question is when do vessels re-establish export flows,” Alan Gelder, Wood Mackenzie’s senior vice president of refining, chemicals and oil markets, said in a statement. “No doubt, tanker rates and insurance will increase dramatically, but these costs would only be a small part of the oil price impact associated with a curtailment of oil flows if they last for more than a few days.”
The rise in prices began weeks ago as the biggest U.S. troop buildup in the Middle East since 2003 seemed to presage war. The market isn’t just reflecting a fear of an unpredictable and prolonged halt to tanker traffic through the Strait. Insurers are threatening to cancel policies on vessels that dare to pass the waterway right now, the Financial Times reported. Iranian attacks on buildings and infrastructure belonging to America’s Arab allies across the Persian Gulf suggests the rest of the region’s oil production could face damage. “Right next door, you’ve got Iraq, you’ve got Saudi Arabia, and you’ve got the Emirates and others who collectively are more like 20 million barrels per day. And that is obviously a much bigger deal,” Rory Johnston, petroleum analyst and author of Commodity Context, told Heatmap’s Matthew Zeitlin.
A North Dakota judge finalized a $345 million judgement against Greenpeace USA on Friday, ordering the American chapter of the famed activist group to pay out the damages from its protests against the construction of the Dakota Access Pipeline. The ruling came after judge James Gion decided in October to slash almost half the $667 million that a jury awarded developer Energy Transfer Partners a year ago. The Dallas-based company called the ruling an “important step in this legal process of holding Greenpeace accountable for its unlawful and damaging actions against us.” In its own statement, Greenpeace said, “this is not the end of the case — or Greenpeace USA.” Rather, the group said it will request a new trial and, if necessary, “appeal the decision to the North Dakota Supreme Court.” The organization, which has since its founding in 1971 embarked on audacious acts of protest to raise awareness about environmental destruction, cast its fight against the ruling as a battle to protect Americans’ First Amendment rights. “In the years since the Standing Rock protests, anti-protest laws have spread across the U.S. and the world. Two of the most important components of change and progress throughout human history — free speech and peaceful protest – have never been more endangered,” Greenpeace said in the statement. “We must defend those rights. Our future depends on it.”
Last year, the International Seabed Authority, a little known United Nations agency based in Jamaica, debated how to establish rules for giving private companies permits to collect mineral-rich nodules off the deep ocean floor in waters far from any country’s maritime borders. Under outside pressure from the U.S., which is not a signatory to the ISA and has vowed under the Trump administration to go it alone on deep-sea mining, countries failed to reach an agreement. When the body reconvenes this week in the capital city of Kingston, the head of the ISA is determined to finalize a plan. In an interview with The New York Times, ISA chief Leticia Caravalho promised to broker a deal this year, lest an area in international waters become what she called the Wild West. “The world agreed 30 years ago that this is an area that belongs to all of us, and we should go there collectively,” she said. Banning mining outright, as some countries (and groups such as Greenpeace) have called for, would only take money away from scientific research and delay setting strict environmental protections, she said. “Being able to make the rules before activity starts is unique in human history,” she said.
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The 220-megawatt ACES Delta green hydrogen project in Utah is by far the largest in the U.S. Now it’s ready to launch. As of last week, all 40 of the electrolyzers at the facility were installed and fully operational, supplier HydrogenPro told the trade publication Hydrogen Insight. It’s a critical milestone for a sector facing mounting challenges as the federal tax credit known as 45V begins its earlier phase out next year and the Trump administration yanks funding for the two regional hubs meant to hasten deployment of green hydrogen technology. Not every project is panning out as well. In New York, the developer Plug Power announced plans to abandon a 120-megawatt plant and sell the land to a data center company.
There’s a lot going on in hydrogen, including entirely new colors added to the rainbow scheme that describes how the fuel is made. If you want a quick 101 guide, this episode of Heatmap's Shift Key podcast is a good place to start.
At this stage in the new nuclear race, the company that looks likely to deploy the first small modular reactor in North America is GE Vernova Hitachi Nuclear Energy, the U.S.-Japanese joint venture building its debut BWRX-300 at the Darlington nuclear plant in Ontario, Canada. The developer is set to build another one of the third-generation, 300-megawatt reactors at the Tennessee Valley Authority soon after, and, as I reported for Heatmap, received major funding from the Department of Energy last year to pull it off. Until now, five European countries have been considering buying their own BWRX-300s: Czechia, Estonia, Finland, Poland, and Sweden. Now add a sixth. Lithuania just signed onto a memorandum of understanding in Washington promising to assess the potential to deploy the reactor, according to World Nuclear News.
There is a bright spot for clean energy in the Middle East. In Iraq, the first 250-megawatt section of what’s designed to be a 1-gigawatt solar farm is expected to enter operation in the next few days after the facility’s transmission connection powered on for the first time. Located in the Basra region, site of some of the bloodiest battles of the Iraq war, the project is a joint venture between the French giant TotalEnergies, which has a 45% stake; the Basrah Oil Company, which commands 30% of the solar farm; and QatarEnergy, with 25%, according to Renewables Now.
It starts — but doesn’t end — with the Strait of Hormuz.
For the second time in a year, the United States and Israel have launched a major aerial assault on Iran. Strikes were reported across the country early Saturday, targeting Iranian leadership and military infrastructure. In retaliation, Iran has launched attacks on Israel and Gulf nations allied with the U.S., with several of the targets appearing to be American military installations. “The United States military is undertaking a massive and ongoing operation,” President Trump said in a video posted to Truth Social explaining his rationale for launching the war.
While the conflict has quickly metastasized across the region, it has the potential to affect the entire world by disrupting the production and shipment of oil and natural gas.
Iran and its neighbors on the Persian Gulf are some of the largest oil and gas producers in the world and the country has long threatened to disrupt oil exports as an act of self-defense or retaliation from attack.
That may be already happening. According to data from Bloomberg, some oil tankers are pausing or turning around outside the vital Strait of Hormuz, a narrow, deep channel between Iran and Oman that connects the Persian Gulf to the Arabian Sea and thus to global markets in and bordering the Indian Ocean.
The strait has been “effectively closed,” according to a report from Tasnim, a semi-official news agency linked to the Iran Revolutionary Guard Corps. British naval officials also said they had “received multiple reports” of broadcasts that “have claimed that the Strait of Hormuz (SoH) has been closed.” And a European Union naval official told Reuters that the Iranian Revolutionary Guard had been broadcasting “no ship is allowed to pass the Strait of Hormuz” to ships in the area. Some tankers are still navigating the strait, according to marine tracking data from Kpler.
But it’s questionable whether Iran can actually maintain any attempted closure of the strait, whether by laying mines or directly threatening and attacking ships.
So far, U.S. attacks are “targeting, fairly heavily, naval assets and assets that are close to the Gulf,” Greg Brew, an analyst at the Eurasia Group, told me, which “suggests that they are trying to degrade Iran’s ability to disrupt energy traffic through the Strait of Hormuz.”
The U.S. is “trying to reduce the risks of Iranian effort to close the strait as part of this operation, rather than waiting to see if the Iranians escalate in that direction. The Iranians have responded by claiming that the strait has been closed. The problem for them now, though, is that they’ll have to enforce that threat.”
Closing the strait was a “tail risk” that had been roiling the oil market in the lead-up to Trump’s decision to launch the attack, Rory Johnston, petroleum analyst and author of Commodity Context, told me.
Global oil prices had gotten skittish over the past weeks, with the Brent crude benchmark getting as low at $66.30 per barrel in early February and getting near $73 per barrel on Friday. Brent prices approached $80 per barrel last June during the 12 Day War between Iran and Israel.
While the market could likely weather disruption to Iran’s own exports, jumpy behavior in the market was due to pricing in an enhanced risk of a region-wide calamity. Options traders especially were “attempting to hedge that enormous tail risk,” Johnston said, and “that was really moving the market.”
And even if the strait is not directly closed off by the Iranian military, ships may find it financially onerous to attempt the passage. “Insurers told ship owners on Saturday they would cancel policies and raise coverage prices for vessels travelling through the Gulf and Strait of Hormuz after the U.S. and Israel attacked Iran,” the Financial Times reported Saturday.
Another risk to the region’s oil sector is that Iran could retaliate by striking oil production and exporting infrastructure in neighboring countries, Johnston told me. “Right next door, you’ve got Iraq, you’ve got Saudi Arabia, and you’ve got the Emirates and others who collectively are more like 20 million barrels per day. And that is obviously a much bigger deal,” Johnston said, comparing their production to Iran’s own oil industry.
Of course, Iran is still a major exporter despite U.S. sanctions; in the days running up to the U.S. attack, it was shipping out around 3 million barrels per day from Kharg Island in the Strait of Hormuz, according to data from Bloomberg, almost triple its exports from equivalent dates in January and nearly its entire daily production.
Iran’s exports “had actually surged immediately ahead of what’s gone down over the past 24 hours,” Johnston told me. “In the past couple days, you’d seen a large surge of tankers departing Kharg Island, and the inventories on Kharg Island being drawn down, which is kind of what you would do if you expected that your exports were about to get disrupted.”
To the extent Iranian oil exports are cut off, that could be a big deal for China, which has become the number one destination for Middle East oil shipments. Beijing has been building up stockpiles of oil, likely preparing for the risk that sanctioned exporters like Iran and Venezuela would go off the market, as well as wider risks to exports from the Middle East.
“China is highly concerned over the military strikes against Iran,” the Chinese foreign ministry wrote on X. “China calls for an immediate stop of the military actions, no further escalation of the tense situation, resumption of dialogue and negotiation, and efforts to uphold peace and stability in the Middle East.”
Last year, China began to substantially increase its stockpiling of oil, going from 84,000 barrels per day to 430,000 barrels per day, some 83% of the growth of its imports, according to data and estimates from Rystad Energy and Erica Downs, a senior research scholar at the Columbia University Center on Global Energy Policy.
While the U.S. is now far less reliant on oil exports from the Middle East, oil and gas is still a global market. If Middle Eastern oil and gas exports are disrupted, that will likely increase the price of energy — whether it’s gasoline, electricity, or even home heating — as American energy producers can sell their barrels and BTUs at higher prices globally.
