DB’s Jim Reid’s Chart of the Day shows the daily change in oil prices since 1990. At the time of publication, oil’s rise (+8.4%) was on track to become the 38th largest daily gain over this 36-year period. The chart shows the clusters where the larger price movements have occurred.
So even though it is a big move, the price would have to rise +9.6%, +13.6%, and +13.9% respectively to be in the top 20, 10, and 5.
There were huge price movements around the GFC (Great Financial Crash) and the Covid-19 unrest, while the 1990-91 Gulf War also saw several double-digit gains.
Looking ahead, Reid states that much will depend on the Strait of Hormuz.
It appears that the street is not officially closed, but passage would be risky at this time due to self-imposed restrictions from virtually all parties that normally pass through it.
Crude oil
Former Goldman resource king warns: ‘No policy can substantially reverse oil prices’
“There is NO policy response that will stop this ascent in crude in the near term,” warns Goldman’s former head of commodity research, Jeff Currie.
This is not exclusively an oil issue; the disruption in the Strait affects various commodities and global trade.
The system “simply cannot absorb such a shock,” leading to extreme hoarding behavior and upward price pressure.
Oil
The price rise is unstoppable in the short term: no policy response (governments, SPR release or other interventions) can reverse the upward trend in oil prices as long as the Strait of Hormuz is blocked.
Currie stressed that policy options “are unlikely to be able to break the advance of crude oil” under current conditions.
Hard Assets
Currie has repeatedly emphasized the theme of “the revenge of the old economy.”
This frames hard assets—particularly energy (oil, natural gas), metals (copper, base/precious metals), agriculture, and other real/physical commodities—as entering or reasserting a commodity supercycle driven by:
Chronic under-investment in traditional supply chains (there have been “years of under-investment in oil and metals” without the big non-OPEC supply wave after 2026).
Structural demand shifts(AI/data center energy needs driving up electricity demand, electrification increasing metal use such as copper/silver and geopolitical fragmentation leading to higher “security premiums” on commodities).
Rotation out of technology/financial assets (extreme MAG7 market capitalizations) toward real assets (smaller mining/energy sectors). This can lead to explosive price movements due to limited free float and supply constraints.
Hoarding and strategic stockpiling by countries like China/India are creating upward price pressure in physical commodities.
Priority geopolitics/security factors over efficiency(“just-in-case” inventory management vs. just-in-time, leading to higher demand per cycle and premiums on energy/metals).
HALO
Jeff Currie’s thinking with respect to the HALO portfolio focuses on Heavy Asset Low Obsolescence (HALO) assets – tangible, physical, “old economy” businesses and sectors with durable infrastructure that resists rapid technological disruption or obsolescence.
Jeff argues that due to geopolitical shocks such as disruptions in the Strait of Hormuz, every major turning point over the past 50 years has caused a capital rotation from asset-light sectors (tech, now ~53% of the S&P) to asset-heavy sectors.
The weight of energy has shrunk to just ~3% (from 25% in the 1970s, when it provided natural inflation protection), leaving portfolios vulnerable as markets have falsely priced energy as shrinking and tech as perpetual.
HALO assets, including commodities, energy, metals, mining, infrastructure (pipelines, railroads, utilities), and other real asset positions, enable investors to weather expected and unexpected inflation, supply chain risks, hoarding behavior, and the “revenge of the old economy” super-cycle – with explosive upside potential through under-investment and capital shifts.
Price Crude oil – Brent May 2026 ($/barrel) – day cloud candle, log scale
ElecÂtricity
Solar and storage reform rural electricity markets
Rural electricity cooperatives may be disrupted by cheaper decentralized renewable generation.
Cooperatives serve about 12% of the U.S. population but manage more than 40% of the national power grid.
Financial pressures may increase across the system, as cooperatives remain tied to long-term fossil supply contracts with producers while renewable alternatives become cheaper for rural customers.
Rural electricity cooperatives may be next in line for a major disruption by cheaper, renewable generation technologies such as wind and solar. The cooperative movement, a creation of FDR’s New Deal, has survived the past ninety-six years with a simple mandate: to provide affordable, reliable electricity in underserved rural areas.
From a commercial perspective, rural electrification always seemed like a bad idea. The electric utility has to invest huge sums of money in poles and cables for a sparsely populated area with a handful of customers per kilometer that yields only a small amount of stable revenue compared to this huge investment. And to make it even more unattractive from a commercial perspective, all farmers wanted in 1935 was mainly electric light and possibly electricity for a radio. On the other hand, rural utilities with more than 20,000 customers per mile of distribution line were doing good business. Those who invested in utilities at the time looked at the huge capital outlay for a rural electricity distribution network and the prospect of disappointing returns and said “no thanks.”
The urban-rural divide in the electricity sector caused a bitter conflict within the industry that has since been erased from the collective memory. But it still manifests itself clearly on a utility’s balance sheet. It comes as no surprise, then, that rural utilities spend a relatively large share of the balance sheet on transmission and distribution activities, especially on a customer basis – all those miles of poles, lines and small substations for delivering electricity to a sparsely populated area.
Today, rural distribution costs per customer are still high, about four times higher than an urban utility. Until recently, this was seen as a competitive advantage. A relatively wide and protected moat for their business model. The existing rural T&D system is too expensive to replicate, so competitive threats were considered minimal. Now decentralized generation (and storage) with renewable resources can be an existential competitive threat. If storage and generation are on the customer’s premises, the expensive distribution grid becomes irrelevant and a potentially stranded asset. And because this renewable electricity is also cheaper than current fossil alternatives, supply contracts are also under pressure.
In the US, there are more than 800 electricity cooperatives serving more than 40 million people. And there are about 60 larger generation and transmission (G&T) cooperatives that own mainly fossil-fired generation assets and sell electricity to the distribution cooperatives under long-term contracts. Customers in these rural areas can realize significant savings by switching to decentralized solar power. There are two reasons for this: 1) the new solar suppliers do not have to physically and financially maintain that extensive rural distribution network, and 2) their electricity costs are lower than those of coal and gas. From the perspective of competition, this is not even a fair fight. This is what the risk of stranded assets at utilities really looks like when caused by a technology transition.
In the rural electrification model in the US, the integrated electric utility is split into two parts: the distribution entity (the cooperatives) and the Generation and Transmission entities that supply electricity. But the financial stresses of faster adoption of solar and renewables will affect each part of the company differently.
Co-ops will lose lucrative customers as large commercial and industrial demand is bid away by solar developers who offer lower electricity costs. But real financial stress will also exist between co-ops and their electricity suppliers, G&Ts. The co-ops are contractually obligated to buy mostly fossil-fired electricity from the G&Ts, but the co-ops realize they are buying electricity at prices that are not now competitive with those of renewables. This situation is likely to worsen. According to industry association NRECA, the current fuel mix consists of 25% coal, 35% gas, 14% nuclear and the rest renewable and hydro. It is the financial tensions between co-ops and G&Ts that worry fixed revenue investors.
Co-ops are businesses where customers have ownership. The co-ops are dedicated to providing reliable electricity service at the lowest possible cost. They can borrow money at a lower cost than their individual customers. They would be vendors, owners and provide maintenance of on-site generation and storage and mini-grids. But those new activities do not address the real problem: what to do with the existing infrastructure. That’s where the financial risk lies.
What a new technology like renewable exposes here is an underlying and unavoidable physical and financial fragility of rural electrification based on existing technology: centrally delivered electricity that reaches the customer through a distribution system with relatively high costs. But today renewable sources produce electricity at lower cost, are quicker to deploy at scale, and – because the power is produced locally – require neither the extensive distribution grid nor the fossil-fired power plants built to do so.
For a rural utility, we can say today that their assets are stranded on both sides.
Middle East conflict tightens LNG supply and shifts cargoes toward Asia
The closure of key gas export facilities in the Middle East is cramping the global supply of liquefied natural gas (LNG), increasing the risk of a shortage and pushing cargoes toward Asia as buyers compete for the limited volume of shipments, according to Bloomberg.
Ras Laffan in Qatar – the world’s largest LNG export complex – has halted production, while shipments through the Strait of Hormuz have also been disrupted. Calculations by Bloomberg, based on production figures from 2025, show that roughly three Qatari LNG cargoes have been effectively removed from the market for every day the disruption persists. A smaller export facility in Abu Dhabi is also unable to ship, leaving 20% of global LNG supply offline.
The tighter market is already reshaping trade flows. Ship-tracking data from Bloomberg shows that at least nine LNG cargoes originally destined for Europe have been diverted to Asia since hostilities began. This is happening at an increasing rate in recent days as available supply rapidly dwindles.
US, Qatar, and Australia dominate LNG supply, Source: Bloomberg
“If this situation were to persist for multiple months, dragging well into the summer, there aren’t enough alternative LNG sources to sufficiently supply the global market,” said Mathieu Utting, analyst at Rystad Energy. “The two other major LNG suppliers, the US and Australia, are already operating at full capacity with little room to increase utilization.”
The tightness comes at a critical time for both regions. Europe needs additional LNG to replenish gas storage facilities depleted during the winter, while warmer-than-normal weather in parts of Asia is expected to drive up air-conditioning demand in the coming months. Prices in both regions have risen sharply in the past week, raising concerns about inflation and economic impact.
“Asian buyers will need to supplement their term supply with spot cargoes,” said James O’Brien, head of LNG at D. Trading, part of private energy company DTEK in Ukraine. “This will inevitably pull more Atlantic molecules east.”
Bloomberg writes that buyers in India, Bangladesh and Thailand are turning to the spot market for additional supply, although some recent tenders for March delivery, including from India, did not attract sellers due to limited availability and high prices.
New LNG supply from the US is unlikely to arrive soon. Although projects such as Golden Pass in Texas and expansions at Corpus Christi and Plaquemines are progressing, additional capacity will come online only gradually.
Analysts say the disruption also reduces the likelihood of a broadly expected LNG surplus this year. Morgan Stanley now says that any extension of the Qatari outage beyond a month “quickly creates a shortage,” after the bank had previously forecast 6 to 8 million tons of oversupply.
Rabobank strategist Florence Schmit estimates that each week of lost Qatari production reduces the expected surplus by about 1.5 million tons, leaving only weeks left before the market tilts into a deficit.
“Markets are now facing a supply deficit even with higher US flows,” Schmit said. “The LNG glut has been delayed by a year.”
Price TTF gas supply year 2027 (eur/MWh) – day cloud candle, log scale
Coal
Coal prices rise sharply as energy shock forces fuel swap at power plants in vulnerable countries
Asian benchmark Newcastle coal prices jumped more than 9% to $150/ton at the beginning of the week (according to BBG data), while energy flows in the Gulf region remain disrupted and transit through the Strait of Hormuz has slowed significantly. The rise in coal prices is driven by a broader energy shock, with rising gas prices making input coal a more economically attractive alternative for power producers.
Thermal coal jumps as Middle Eastern conflict rages on by ICE Futures Europe
Last week’s IRGC kamikazedrone attack, which crippled Qatar’s massive LNG export facility – responsible for roughly 20% of global supply – is driving the gas-to-coal switch, particularly in Europe, where gas prices have risen 50%.
Samantha Dart (Global Co-Head Commodities Research) wrote a note on natural gas last weekend:
“European natural gas prices (TTF) closed the week up 88% from pre-Iran-conflict levels, at 53 EUR/MWh. For context, approximately 20% of global liquefied natural gas (LNG) volumes flow through the Strait of Hormuz, largely produced by Qatar, and no reroutes exist. This flow is 100% halted at the moment, with Qatari production fully down following a drone attack.
Source: ICE, S&P Global Commodity Insights, Goldman Sachs Global Investment Research
We base-case that Qatari LNG production will be restored by early April, and we have accordingly raised our April TTF forecast to 55 EUR/MWh, well into the 45 EUR/MWh (fuel oil) to 71 EUR/MWh (diesel) gas-to-oil switching range because we think increased fuel switching away from gas will be required to normalize European gas storage ahead of the next winter. We have not changed our 21 EUR/MWh 2027 TTF forecast. In a scenario where the Qatari supply shock lasts over 1 month, we would expect TTF prices to rally further to the mid-70 EURs/MWh, where diesel is currently priced, to incentivize further switching. A scenario where the shock lasts longer than two months would likely elevator TTF above 100 EURs/MWh to incentivize broader industrial demand destruction across Europe and Asia.”
It should be noted that Exhibit 2 above shows that TTF is already in the coal-switch range. The rest of Dart’s note can be read here.
In a separate note, UBS analyst Manik Narain warns of EM energy risks if the Hormuz bottleneck remains clogged:
“EM Asia appears most directly at risk, accounting for ~73% of oil shipped through the Strait of Hormuz. 40-70% of India, Korea and Thailand’s oil supply transits this route; while Thailand and Taiwan generate 45-60% of electricity from gas, indicating potential price risks to tech and other industrial supply chains if the conflict doesn’t abate soon.”
The duration of the conflict is crucial because higher natural gas prices will only fuel the ongoing gas-to-coal switch.
UBS highlighted that electricity generation in emerging markets such as Mexico, Thailand and Taiwan remain highly exposed to oil and gas, making electricity systems vulnerable to rising fuel prices. Taiwan stands out, given its central role in the global AI chip supply chain, meaning that rising electricity costs there could have implications far beyond the domestic electricity market.
Electricity generation, source: Haver, UBS
Operation Epic Fury has proven to be one way to ‘Make Coal Great Again’…
Italy challenges EU emissions trading: hidden tax drives industry abroad
Submitted by Thomas Kolbe
Italian weeks in Brussels: the day after Prime Minister Giorgia Meloni announced a strict migration policy and openly defied Brussels’ globalist open-borders policy, a second shock followed.
At the beginning of the week, Italian Industry Minister Adolfo Urso called for the suspension of EU-wide COâ‚‚ trade – or at least a reform. Rome calls it a hidden tax and deplores the increasing relocation of Italian industrial companies to non-European locations. A conclusion that will sound all too familiar in Germany.
EU climate policy is artificially driving costs ever higher across the board. Companies that can operate flexibly are losing patience with these fanatical clientelistic policies. Investments are deployed elsewhere, jobs shifted, while taxes desired by policymakers are collected abroad. Yet this argument seems to fall on deaf ears in European politics, as long as European taxpayers provide an easy source of revenue. Unlike mobile capital, citizens cannot easily move their wealth and property out of reach.
It is high time for European leaders to confront the European Commission with its grotesque de-growth fantasies. The so-called green transformation is under legitimacy pressure, now that it is clear that the “green Hesperia” – a realm where economic rules and logic will never exist. Brussels’ attempt to build a power base, with its own “green” industrial sector as its economic foundation, is beginning to look more and more like a project of power-hungry dreamers hanging like a millstone around the neck of the private sector.
While Italy is drawing a clear line and trying to distance itself from Brussels’ industrial plunder, few in German politics seem seriously concerned that the carbon emissions trading system is channeling real capital from productive sectors to an unproductive green clientele economy, while feeding the moral self-assurance of climate policy quacks.
What is sold as “transformation” is in reality a massive impoverishment program that erodes both the middle class and its civic values. Prosperity comes from a commitment to achievement, individual sovereignty and freedom. Only an already damaged civilization allows an unqualified political elite to centralize power.
European emissions trading is a centralized redistribution system that will be extended to the transportation and heating sectors next year. Brussels is pushing its reach deeper and deeper into the daily lives of European citizens. It is a given that costs will rise. An energy blockade of the Strait of Hormuz is not even required; Europeans can achieve this all by themselves.
Even Friedrich Merz proved in February, on the Welt podcast with Robin Alexander and Dagmar Rosenfeld, that he belongs to the group of green statists. There, he defended the European COâ‚‚ mechanism as an indispensable pillar of transformation policies, a great achievement of European convergence.
A few days before, he sounded completely different. At a meeting of workers in Antwerp, Merz was almost toxically masculine, in line with the Italian government, calling for a radical reform of carbon looting climate policy. The contrast between the two separate optrendens could not have been stronger.
Yet after a year of observing the Chancellor’s public appearances, one knows: Merz’s course changes and reversals are no exception – they are part of his political camouflage. Performance acts, distraction techniques aimed only at stabilizing the polls. In this respect, he is a classic politician, whose flood of words generates emotional attachment, rather than form wins over substance.
However, his green moral compass functions reliably. Regulatory reform will not come from this man in Germany, and not by reversing the green transformation mechanism. Loyal voters can be sure: the Chancellor will deliver this as surely as he shows his recurring obedience to the Social Democratic junior partner.
The political importance of emissions trading is underscored by at least two points:
First, it provides Brussels with its own steadily growing revenue stream without being a direct tax. Brussels gains autonomy and additional bargaining power in its struggle with centrifugal forces in the Union, such as Viktor Orbán’s Hungary and Giorgia Meloni’s Italy.
Second, it creates the green arts economy: a reliable voter base for the established party cartel. It funds the NGO complex and ensures the future growth of the bureaucratic apparatus.
It makes sense there that the real initiators of green transformation -found mostly in German politics – will cling to this instrument until sufficient domestic forces force a reversal. Such pressure can ultimately come only from society and the economy itself.
The question is: when will Germany join an alliance for regulatory reform?
The answer lies in the bank accounts, stock portfolios, real estate and cash reserves of the German middle class. Here politics has hidden its activatable anesthetic of its welfare state – a sedative gradually fed into the redistribution mechanism to buy social peace and the path to the green ideal society.
Germany abolishes subsidy for rooftop solar panels
Germany plans to abolish fixed feed-in fees for small rooftop solar panel installations by 2027. The country argues that falling costs make the technology economically viable without subsidies (narrator:“it is not“), according to Bloomberg.
Currently, rooftop solar installations of any type are eligible for guaranteed tariffs. However, this could change within months if the government approves the German economy ministry’s proposal to remove subsidies for projects of less than 25 kilowatts, according to OilPrice.
The ministry argues that small rooftop solar installations are often profitable today without incentives, thanks to lower costs.
“To strengthen the cost efficiency of solar expansion, a stronger focus will in future be placed on cost-effective solar parks,” according to the ministry’s proposal.
The plans for subsidy reform were leaked by German media.
“If the leaked draft is genuine, it would be yet another attack on renewable energy, following the grid package proposal, ” says Ursula Heinen-Esser, president of Germany’s renewable energy association BEE.
Removing support for rooftop solar panels would have “disastrous consequences” for the industry and would rob homeowners of participation in the energy transition, Heinen-Esser adds.
The German Solar Energy Association, BSW-Solar, also deplores the leaked draft proposal as “a frontal attack on Germany’s energy transition.”
Germany wants to increase onshore wind capacity to 115 gigawatts and solar capacity to 215 gigawatts by the end of the decade. Europe’s largest economy has a target of 80% renewable of its electricity production by 2030.
Germany is halfway to its 2030 goals in solar, BSW-Solar said last June.
Germany experienced the highest number of onshore wind turbines commissioned in eight years in the first half of 2025, but the recovery in installations is still not on pace to meet official targets, the German wind energy association, Bundesverband WindEnergie (BWE) said in mid-2025.
UBS discusses the following maritime bottleneck that investors should keep an eye on
Much attention has been focused on the Strait of Hormuz since the waterway was effectively closed, not only because of IRGC drone threats, but mainly because maritime insurers are withdrawing their war-risk coverage related to the region. The focus now shifts to the other critical maritime bottlenecks. If Washington can put pressure on Iranian oil flows and thereby also curb China’s cheap Gulf crude, then the Taiwan Strait and South China Sea also become potential flashpoints that traders can no longer ignore.
For further insight into which critical maritime bottlenecks and geopolitical flashpoints investors should keep an eye on, Bilahari Kausikan, former Permanent Secretary of Singapore’s Ministry of Foreign Affairs, spoke with UBS’s Aditi Samajpati earlier on Thursday at the 14th UBS OneASEAN Summit in Singapore.
Kausikan told Samajpati that China claims about 80 percent of the South China Sea, but other surrounding countries reject those claims, and none of the disputes are likely to be resolved anytime soon. He described the situation in the heavily disputed shipping lane as a “strategic stalemate,” not an immediate crisis, because China is unlikely to openly block trade or challenge freedom of navigation if it risks war with the U.S. in doing so.
“Obviously, the South China Sea is another point of vulnerability. There are multiple disputes and China claims about 80% of the South China Sea, which is not accepted by surrounding sates,” Kausikan said.
“But I think overall the situation in the South China Sea – by the way, none of these disputes are going to be resolved – but I think overall it is not ideal, but not dire,” Kausikan said.
He continued: “It’s a strategic stalemate. On the other hand, the Chinese cannot stop the US and other powers from operating in the South China Sea, without risking war.”
Kausikan points out that the U.S. Navy’s presence should be seen as a stabilizing force that protects trade flows and prevents China from turning its claims into unchallenged control.
As for U.S. pressure on Venezuela and Iran, Kausikan said it is unclear whether Washington’s specific goal is to curtail China’s crude oil imports, but that it could have that effect, since both countries are crucial, low-cost suppliers of crude to China.
At the same time, he said Trump’s willingness to offer protection to commercial traffic through Hormuz suggests that the US is not trying to cut off China completely, but rather to create leverage.
For Asia as a whole, Kausikan said energy security should be a major theme for the entire region. He said ASEAN’s best path to greater strategic autonomy is deeper energy integration, particularly through a shared regional power grid that can combine nuclear, hydropower and other energy sources.
Summary: China and the rest of Asia received a huge wake-up call in recent weeks when cheap crude oil and LNG flows from the Gulf were curtailed. This is all playing out ahead of President Trump’s trip to China later this month.
The Strait of Hormuz is down for now. The other maritime bottlenecks worldwide should also be watched closely.
Global shipping’s chokepoints, Source: Statista
The spillover risks from the Middle East conflict are increasing. The question now is: where does the next powder keg explode?
Geopolitics
Insurance as a weapon: how the Strait of Hormuz is shaping global power and energy markets
Submitted by Thomas Kolbe
War is raging in Iran. Amid the propaganda fog, it is becoming increasingly difficult to separate fact from fiction, distinguish AI-generated material from actual airstrikes, and see through the carefully woven veil of media spin and national interests. Yet here we try to make sense of the latest moves on the geopolitical chessboard.
A direct consequence of the blockade of the Strait of Hormuz is a fatal ripple effect in the energy sector. Companies like QatarEnergy are forced to reduce gas and oil production. Refineries are closing and tankers can no longer provide transportation. The physical logistics of energy markets falter with consequences far beyond the region.
Markets are reacting nervously. Both spot and futures prices continue to rise. At the close of trading in New York, WTI crude oil stood at about $93 a barrel, up nearly 20 percent since the US-Israeli intervention against Iran’s Ayatollah regime.
From a European perspective, the implications are clear. The highly energy-dependent continent is becoming increasingly adrift politically. The stakes are high for many governments if prices are not brought under control soon. Rising energy costs, growing production costs and increasing pressure on households and businesses threaten to become a new economic stress test for Europe.
For a week now, Brussels has been in feverish activity. Ursula von der Leyen’s European Commission is doing media-friendly exercises that are nothing more than shadow boxing: trying to solve a deficit problem that cannot be solved by domestic production.
Member states are currently discussing joint procurement schemes and familiar instruments such as subsidies and cost offsets for energy-intensive industries – the usual toolbox, repeatedly applied in the past. In other words, it mostly comes down to massive debt accumulation to temporarily alleviate the effects of the Hormuz blockade.
Looking at Germany, one can see how vulnerable the European energy architecture remains. The rapid decline in gas storage levels underscores the importance of a robust strategic reserve.
In this context, the European decision to mandate a strategic oil reserve equivalent to at least 90 days of average consumption was prescient. The timing and extent of reserve deployment remain uncertain.
A note on the disproportionately high gasoline prices in Germany: this is exactly the effect when a state with a high tax burden claims roughly 65 percent of the consumer price. In an energy crisis, this structure paradoxically makes the state a short-term beneficiary of rising prices.
Europe’s inability to act was epitomized by German Environment Minister Carsten Schneider of the not-so-social Social Democrats. Faced with rising fuel costs, he bluntly advised Germans to switch to electric cars. This cynical attitude, coming from the safety of a well-fed political bubble – is what makes this attitude so insufferable. Those who drive the country economically, millions of commuters dependent on cars for their livelihood, are completely ignored.
Obviously, the expansion of renewable energy and the continued commitment to the green transition remain central items on the EU agenda. They simply cannot escape their closed, ideologically narrow argumentative framework.
Other options remain politically taboo. The exploration of domestic gas reserves in Europe or the long-term maintenance of coal plants – even in Germany, is still not seriously considered. The pressure on political decision-makers has apparently not yet reached the level needed to return to a pragmatic, rational energy policy.
From an American perspective, the Hormuz blockade and Tehran’s planned political power shift fit into a larger strategic concept. Control of oil and gas flows from Venezuela, combined with the record domestic production of the US, could create a significant problem for China, which is existentially dependent on imports from these regions.
Should the U.S. achieve its political goals in Tehran, a massive power shift would tilt in its favor. Together with the oil states more closely tied to its power structure, it could dominate the global energy market and significantly strengthen its position against Beijing.
This is crucial for future negotiations with China. At stake are not only energy but also access to rare earths, curbing Chinese influence in the Western Hemisphere, and the so-called fentanyl war, in which the last word has not yet been said.
Another observation deserves mention. In this reorganizing geopolitical power constellation, largely determined by access to energy and strategic resources, Europe has largely lost its strategic freedom of action. Between the U.S., Russia, and China, it hardly emerges as an independent actor.
Europe has thus achieved a remarkable feat: the continent has politically fallen between all chairs – and now, as a dependent price taker in energy markets, has its back against the wall.
The crisis in the Strait of Hormuz also shook up a previously ignored market: marine insurance. Several tanker attacks followed Tehran’s threat to close the Strait. Insurance premiums rose rapidly and major suppliers – a market dominated by the City of London – immediately pulled out. Risks were too high and coverage in the event of a claim could no longer be guaranteed.
This was the defining moment: U.S. President Donald Trump announced that the U.S. Development Finance Corporation (DFC) would jump into the gap. State-backed war and political risk coverage at “very reasonable” prices, as he put it, would provide relief. This creates a government-backed competitor to Lloyd’s. The U.S. not only provides insurance capacity, but also combines it politically with U.S. maritime guidance – gunboats.
For the now virtually invisible British Empire in financial and insurance markets, this, after the massive attacks on the London-based LBMA precious metals markets, leaves the next pillar of its power structure shaky, a framework previously supported largely by international trade.
In short, the next geopolitical bargaining chip for the U.S. comes into view if it could take a significant part of this insurance business. Whoever controls this business decides which risks are covered and which tankers are accepted and is thus a powerful tool of sanction. Insurance has thus become a geostrategic tool, with Europe on the sidelines.
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