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Hello Power Up readers,

Since our last newsletter on Monday, energy markets have been coming to terms with the reality that the disruption to oil and gas sparked by the widening Mideast war is real and will probably last for quite a while. Oil prices rose on Thursday and are around $83 a barrel, their highest since July 2024.

All eyes remain on the Strait of Hormuz, the vital sea lane that transports nearly a fifth of the world’s oil and gas, which has largely become a no-go zone for ships. The number of vessels targeted in the Gulf and around Hormuz has risen to around 10, and over 200 tankers are now sitting idle at both sides of the strait.

The Hormuz bottleneck is also having severe knock-on impact on producers, refiners and consumers. With few alternative export routes out of the region, oil producers have been forced to fill up storage tanks. Iraq has already run out of storage space, and on Tuesday, it shut down over 1.1 million barrels per day of production, around a quarter of its total output, and could be forced to cut as much as 3 million bpd in the coming days.

Oil prices pared some of their gains after U.S. President Donald Trump said on Tuesday he had ordered the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf. He also said the U.S. Navy ‌could begin escorting vessels through the Strait of Hormuz.

This plan to revive shipping through the narrow waterway will require a Herculean international effort. Even if successful, it will likely offer only limited relief as time quickly runs out to avert the worst global economic fallout from the closure of this vital energy artery. More on this below.

Meanwhile, Iranian forces continued to target energy infrastructure across the Gulf. The most notable casualty so far has been Qatar, which shut down its massive liquefied natural gas (LNG) complex in Ras Laffan. As a reminder, the country exports a fifth of the world’s supplies of the super-chilled fuel. Saudi Arabia’s largest refinery in Ras Tanura remains shut as well after it was targeted for a second time by drones.

In Asia, which heavily depends on Mideast oil, refiners are reducing operating rates in order to conserve crude oil.

To stay up to date on everything that’s happening in Iran, sign up to the Reuters Iran Briefing. Readers will receive the latest headlines on the Middle East conflict six days a week as well as in-depth analysis with the Gulf Currents newsletter.

Here are a few more headlines:

As always, don’t hesitate to contact me at ron.bousso@thomsonreuters.com or follow me on LinkedIn with any questions or thoughts.

The U.S. administration’s effort to unblock the Strait of Hormuz by offering shippers financial guarantees and potentially Navy protection is unlikely to reassure shippers under current conditions.

Reducing costs would do little to address fears that vessels could still be attacked. U.S. naval escorts would certainly lower the risk, but they are unlikely to offer full protection against Iran's extensive use of drones, missiles and fast-attack boats.

This would not be the first time Washington has intervened to secure shipping lanes in the region.

During the "Tanker War" phase of the Iran–Iraq conflict in the late 1980s, the U.S. escorted and protected Kuwaiti oil tankers under Operation Earnest Will to deter Iranian attacks.

The scale of the challenge today, however, is much bigger.