In its editorial on May 17th, the Financial Times sounded the alarm over the looming energy crunch
. In reality, the alarm has been sounding ever since Iran took full control of the Strait of Hormuz on March 4th, and even more so since the United States, despite the ceasefire of April 8th, imposed its own counter-blockade, with dozens of warships, on April 13th. Negotiations, whether genuine or feigned, Omani mediation, and American threats to finish the job
— a campaign stretched on February 28th with the killings of Tehran’s leaders — have prolonged the stalemate in the third American war in the Persian Gulf.
The alarm over the looming energy crisis became official on May 13th, when the International Energy Agency (IEA) published its report on the global oil market: More than ten weeks after the war in the Middle East began, mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace
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Demand, supply, and stocks
The IEA quantifies the severity of the crisis caused by the constriction of the Gulf's main artery. Global demand for oil, although having contracted since the start of the conflict, remains at 104 million barrels per day (mb/d) in 2026 on an annual basis. Global supply, however, fell in April to 95 mb/d. Supplies through Hormuz have plummeted by 14.4 mb/d below pre-war levels. Increased production in the Atlantic basin and the commissioning of two secondary pipelines limit total losses to 12.8 mb/d.
Cumulative supply losses from the Gulf have exceeded one billion barrels, an unprecedented supply shock
. Region output in the second quarter fell to 78.7 mb/d, a drop of 4.5 mb/d. The imbalance between supply and demand is putting pressure on prices. The price of Brent, depending on Donald Trump's announcements of war or peace, has fluctuated between $90 and $122 a barrel. Price volatility is one aspect of the fog of war that shapes the business decisions of producers active in the market (US oil companies in particular) and their bets on future prices ahead of the summer peak in demand. Higher oil prices are feeding through into petrol, diesel, and food prices. Headline inflation, still only partially reflecting the rising cost of living, rose in April to 3% in Europe and 3.8% in the United States.
Global oil stocks fell by 129 million barrels (mb) in March and by a further 117 mb in April: this was the result of a 170 mb reduction in onshore inventories and a 53 mb increase in offshore floating storage, due to the accumulation of unsold crude in the Gulf aboard an old oil tankers. Most of the consumption of onshore reserves has taken place in industrialised countries: OECD countries have consumed 146 mb. The IEA adds 101 mb of natural gas liquids and biofuels to the tally of reserves consumed. Overall, excluding the onshore and offshore stocks of the Gulf countries, global oil stocks have fallen by 378 million barrels in two months.
Oil stocks and prices
It should be noted that global oil stocks amount to 7.9 billion barrels, of which 5.5 billion are crude oil and 2.4 billion are refined products. The current pipeline amounts to just under 5% of global stocks. Their distribution is highly uneven: shortages and price rises for petroleum products affect different countries and the social classes within them in different ways, depending on disposable income. The OECD has consumed a third of the strategic reserves (400 million barrels) that the IEA made available on March 11th. The Agency notes that OECD countries' industrial stocks amount to 2.8 billion barrels. The size of these stocks is one reason why the price per barrel remains around $100-$110, whereas various forecasts had placed it above $150 or even $200.
Stocks are not infinite. Some Asian countries are running out. Other estimates of reserves are lower: S&P Global Energy estimates crude oil stocks at 4 billion barrels; Morgan Stanley puts the figure at 4.8 billion. Dozens of countries are implementing emergency and austerity measures.
Those with the largest reserves and resources will have a relative advantage. China, which possesses vast reserves and has reduced its imports of petroleum products, is currently hosting several Asian delegations, to whom it is promising energy aid on two conditions: priority will always be given to Beijing's needs, and the countries receiving aid must commit to adopting the Chinese energy model in terms of renewables and the electrification of transport.
Fanning fears of an energy crisis — always a possibility in the event of a prolonged war — seems more like an attempt to push the White House towards bringing an end to its ill-conceived adventure in the Persian Gulf. According to the Financial Times, ever in the event of a quick turnaround
, it will take until the end of the year — i.e., until the US mid-term elections — to normalise Gulf production. It will take time to restart the eight out-of-service refineries in the Gulf and Qatar's Liquefied natural gas plant. But for the American oil and gas industry, this is the fifth year of a bonanza. On this side of the Atlantic, twenty European governments did not wait for the IEA's warning to adopt immediate cuts in fuel expenditures.
The UAE's breakaway
On April 18th, the United Arab Emirates announced its decision to leave OPEC. At the start of the war, it was the main target of Tehran's retaliation, struck by thousands of missiles and drones. The divergence of the UAE's interests from Saudi Arabia's is just as deep as its rift with Iran, for both geopolitical and economic reasons. Saudi Arabia has increasingly aligned itself with Pakistan, Egypt, and Turkey, while the Emirates have joined the Abraham Accords with Israel under Washington's aegis.
The UAE's ambassador to the US, Yousif Al Otaiba, son of a former oil minister and former president of the cartel, outlined the economic reasons for the break with OPEC in an article in the Financial Times. When the UAE joined, it was not even a nation. It was totally dependent on oil but did not aspire to become a petro-state. Its aim was to become a diversified economy
. Today, energy accounts for less than a quarter of the UAE's GDP and is no longer the backbone of its ambitions. In four years, they have signed 35 economic partnership agreements, fifteen of which are already operational, including with India, South Korea, Ukraine, Israel, Kenya, Malaysia, Vietnam, and Jordan. The Emirates have committed to investing $1.4 trillion as a technology partner with the United States and are working on a bilateral trade agreement with the European Union. The exit from OPEC reflects the structural changes
in the Emirates and the global economy, says Al Otaiba. The UAE will make tens of billions in infrastructure and energy investments, and will increase its oil production to 5 mb/d by 2027.
Trump congratulated the Emirates on leaving OPEC, and The Wall Street Journal saw it as a victory for American tracking, which would have achieved Washington's long-time strategic goal of curbing the Organization of the Petroleum Exporting Countries' control over oil prices
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The two paths of oil
Despite the ambassador's cosmopolitan outlook, oil politics is a central issue in the dispute with Saudi Arabia. Riyadh has always regarded the quota system among cartel members as the key instrument for sustaining oil prices, on which both the Gulf States and the OPEC+ alliance with the oil and gas producers of the former Soviet Union depend. A study by Deutsche Bank highlights the close link between oil prices and fiscal capacity, the fiscal breakeven
of oil producing countries, i.e., the minimum price per barrel required to balance their budgets. The lowest break-even point, below $50 per barrel, is found in the UAE and Qatar, which had already left OPEC in 2019. Saudi Arabia is close to $90, Iran to $170. The quota policy is therefore essential for the stability of public finances.
The UAE, which represents the most advanced financial centre in the Gulf, in competition with Riyadh, prioritises extraction capacity — that is, realising its oil revenues as quickly as possible — convinced that the evolution of global energy politics in favour of renewable sources, the electrification of transport and domestic consumption, and the return to nuclear power are bringing peak oil closer: barrels that are not extracted speedily risk never being extracted at all. Riyadh aims to exploit its 267 billion barrels of reserves for as long as possible: with a daily production of 11 mb/d, these reserves could theoretically last 65 years. Abu Dhabi has less than half of Saudi Arabia's reserves and wants to have a free hand to exploit them as it sees fit.
Imperialism of energy reserves
The United States has proven oil reserves of just 48 billion barrels. This figure includes shale oil, which accounts for 60% of US oil reserves, according to the Energy Information Administration (EIA). At the current rate of production (12 mb/d) and barring new discoveries or technologies to improve resource extraction, US reserves would have a theoretical lifespan of just seven years. Firstly, it is worth noting that without the discovery of fracking technology, US reserves would probably already have been exhausted. It is equally true that fracking has ushered in an era of frenetic exploitation of the subsoil.
Secondly, US reserves have remained roughly at the same level for six years, which means that every year the industry replaces the extracted portion — 6-7 billion barrels of crude oil — through new wells or by increasing the productivity of existing ones.
Thirdly, a similar calculation can be made for proven natural gas reserves: the EIA estimates a total of 16.5 trillion cubic metres (tcm) of such reserves in US subsoil, of which 65% (10.7 tcm) comes from shale gas deposits. At the current annual production rate (1.2 tcm), US gas has, barring new discoveries, roughly 14 years left.
Fourthly, if one interprets the Trump administration's interest in countries rich in energy reserves as that of a power seeking new sources of raw materials because it has mercilessly devoured its own, then the many successive American forays have their own logic. The act of piracy committed against Venezuela (300 billion barrels of reserves), the war waged against Iraq (209 billion barrels of reserves), the withdrawal of the United Arab Emirates (113 billion barrels of reserves) from the OPEC cartel and its move into Washington's orbit, the indecent proposal to Canada (170 billion barrels of reserves) to become the 51st US State constitute a series of moves aimed at influencing or seizing one-sixth of global production, but above all 43% of the world's oil reserves.
In the struggle against its own decline, American imperialism will impart further lessons in brigandage to all powers, old and emerging alike. In turn, sooner or later these powers will have the opportunity to follow the example of the world's greatest democracy
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