The end of OPEC: what does it mean for the war in Iran and global energy prices?
Did the UAE just cause a rare shift in global energy markets? The United Arab Emirates said Tuesday it would leave OPEC by May 1 after 60 years of membership. This deals a blow to the cartel as the war in Iran exposes divisions between the Gulf states and Iran.
The departure of the UAE, one of the group’s largest producers with 15% of total exports, weakens OPEC’s control over global oil supply and widens the gap between the UAE and Saudi Arabia.Moreover, the dissolution of OPEC hampers Iran’s ability to use oil exports as economic leverage in the future.
OPEC’s game is zero competition and artificial scarcity.OPEC was founded in the 1960s as a trade consortium of oil producers, but became an economic weapon in the 1970s to keep pressure on the U.S. and other countries that were providing aid to Israel. This led to a stranglehold on 40% of the world’s oil supply and an initial explosion in gasoline inflation.Prices at the pump quadrupled. This resulted in a decade-long stagflation, the confluence of inflation and stagnation.
Limited exports became the status quo and higher prices the norm in the decades that followed, with brief moments of relief.As an OPEC member, Iran has long benefited from this bottleneck as an OPEC member.However, the world of energy has changed dramatically in a short period of time.
An independent UAE, no longer constrained by OPEC limits, now has the ability to increase production, from 3 million barrels per day to more than 5 million barrels per day.New competition is also likely to increase production rates in Saudi Arabia.
UAE Energy Minister Suhail Mohamed al-Mazrouei told Reuters that the decision was made after researching various energy strategies. The issue was also not discussed with any other country. “This is a policy decision taken after a careful look at current and future policies regarding production levels,” Mazrouei said.
He also said the world would demand more energy. The UAE could meet this demand.This means the UAE wants to be strategically ahead of the competition in an attempt to flood the market with oil as the Hormuz situation stabilizes.Saudi Arabia has also indicated its intention to increase production by 2027.
This suggests that the post-Iran war era will be supply-driven with much lower energy prices over the next two years.It could mark the end of the steering that has characterized the market for the past 50 years.
The UAE is well positioned to weather the Hormuz crisis with the Habshan-Fujairah (ADCOP) pipeline that bypasses the Hormuz completely and transports about 2 million barrels per day.This advantage enables them to lead the export group when the war ends.
An inevitable increase in competitive production in the Gulf and declining resistance to more drilling and refining in the U.S. will lead to long-term energy security for the West.The short-term view, however, is less rosy.At best, opening Hormuz within two months, shipping through the strait will still need to recover until the end of 2026.After 2027, the price drop will be significant; the breakup of the largest OPEC members is an unprecedented market event with world-changing consequences.
The war in Iran is a major cause of this shift, but to gain any advantage, the Hormuz will have to reopen as soon as possible.In the larger, strategic picture, this means the end of Iran’s negotiating power. The regime will want to resist this as much as possible.
Recent reports of Iran’s “tank top” and declining storage capacity make negotiations a priority for the regime. Otherwise, their export capacity would be lower for years because of the loss of oil resources due to shutdowns and pressure damage.It seems that the UAE and other Gulf exporters are now positioning themselves for this eventuality.
Crude oil
Germany goes for Polish oil route while Russia halts supplies through Druzhba
Germany seeks solutions to divert crude oil supplies to the PCK Schwedt refinery after Russia indicated it would stop Kazakh oil deliveries through the Druzhba pipeline as of May 1. At stake is 43,000 barrels per day (bpd).
Therefore, Berlin is now in talks with Poland about transport of replacement barrels through the port of Gdansk, with potential deliveries continuing to Schwedt, the refinery that supplies much of eastern Germany, including Berlin. The plant is a recurring bottleneck become since Germany has moved away from Russian crude oil. This last disturbance shows how little room there is left in the system.
Kazakhstan shipped 2.146 million metric tons via Druzhba to Germany, up 44% from 2024, with another 730,000 metric tons delivered in the first quarter.
Poland says it has the technical capacity to handle additional flows, but access to ports, shipping schedules, crude oil availability and refinery configurations are also of importance. Replacing pipeline crude oil with barrels per ship is rarely a one-to-one exchange.
The episode also exposes an old vulnerability in European oil security exposed, namely that infrastructure can be diversified on paper and yet remain concentrated in practice. Indeed, the Druzbha still runs through Russia.
There are alternatives to Schwedt, but they are more expensive and complicated. The refinery isbecome increasingly reliant on crude oil entering through the Baltic routes and the German port of Rostock, but those channels are limited.
This seems to be a larger signal be for the oil market. What looks like a regional supply disruption provides a broader premium around logistics security, not only in terms of the raw supply. In Europe, barrels are one issue. These barrels move is another.
And that distinction is increasingly important for prices, refinery margins and the value of secure non-Russian supply routes.
Price Crude oil – Brent June 2026 ($/barrel) – day cloud candle, log scale
ElecÂtricity
“Revival in electrification”: Goldman says fuel price shock leads to higher demand for electric vehicles
The third week of the conflict between the U.S. and Iran already showed signs that the demand for electric vehicleswere gaining popularity in Asia,Where the energy shock was felt hardest. This was followed earlier this month by a separate memo confirming that demand for electric vehicles is began to increase again.
Now Goldman analysts led by Kota Yuzawa see global demand for electric vehicles gaining momentum after several years of muted demand. The fuel price shock at the pump is pushing consumers back toward EVs.
Yuzawa notes notes that the share of the top 30 countries where electric vehicle sales had increased month over month rose from 30% in January to 60% in February and 80% in March. This accelering suggests that the energy shock could pull the EV industry out of a multi-year rut.
The global acceleration in demand for electric vehicles likely gained further momentum in April due to the high prices. Goldman’s commodities team, led by Daan Struyven, wrote in a separate note that its WTI forecast for the 4th kwartime was adjusted from $75 to $83.
This suggests that the energy crisis is becoming more protracted and by high fuel prices at the pump demand for electric vehicles will likely continue to rise – at least until the prices of Brent and WTI plummet. This all depends dependent on the reopening of the Strait of Hormuz and the signing of a US-Iran peace deal.
Progress in electrification by country
Actually, the EV industry not only had lower interest rates on auto loans needed. A global fuel price shock from the closing of the Hormuz bottleneck has revived demand. Who Could have thought of that.
Meta has signed an agreement with startup Overview Energy to install up to 1 gigawatt of space-based solar power, although a pilot satellite will not be launched until 2028 at the earliest – and commercial viability is still years away.
Despite ambitions for clean energy, Big Tech still relies heavily on natural gas: Meta finances 10 new gas plants for its data center campus in Louisiana and Google is building a major gas facility in North Texas.
Google indicates That in five years, CO2 emissions were reduced by 48% has increased and admits that it net-zero target of 2030 may be out of reach as demand for AI energy remains increase.
The AI boom has unleashed an energy monster the likes of which the world has never seen before. No one knows exactly how much energy the AI sector will gobble up, as major language models continue to evolve and expand. Indeed, we actually don’t even know how much energy it consumes now. However, most experts believe that we are seeing a sharp and continuing increase in data center demand can be expected. Data centers will drive the technology sector in the coming years as the global economy increasingly integrates AI into virtually every market sector around the world.
“The integration of AI into almost everything from customer service calls to algorithmic ‘bosses’ to warfare creates huge demand,” said The Washington Post https://www.washingtonpost.com/climate-environment/2025/08/26/ai-climate-costs-efficiency/previous year. “Despite dramatic efficiencies, that profits flow back to greater, increasingly hungrye models. These are powered by fossil fuels and create the energy monster that we imagine.”
And so far, it is consumers who bear the burden of this “energy monster. While data centers put unprecedented pressure on local power grids, consumers pay the price for the extra competition at the meter. But this system is unsustainable and in flux. In May, due to the outrage of voters prior to the midterm elections, Big Tech companies signed signed a pledge the buy or supply their own energy supplies to power their energy-hungry data centers. This would protect consumers from rising energy prices.
As a result of this large technology companies are beginning to invest more heavily in next-gen and clean energy alternatives. They are doing this to meet their huge future energy needs without jettisoning climate promises. Only this week Meta announced a deal with Overview Energy to begin development of a space-based solar energy system. Allows energy to be sent to Earth in the dark.
Overview Energy is a startup that is putting solar satellites into orbit around the Earth, where they can receive energy from the sun at any time of day or night receive. Meta, the company behind Facebook, has struck a deal with the energy startup to develop up to 1 gigawatt of solar power in the space, the equivalent of the energy production of a nuclear reactor.
However, the deal is currently entirely theoretical since the technology of space solar has not yet kept up with the vision of the two companies.Overview Energy aims to launch a pilot satellite into orbit by 2028. A gigawatts of power is only few years away from reality, if it is all realized. Proponents of the technology, however, believe that it is only a matter of time before space-based solar energy becomes commercially viable becomes. Some believe that it can be cost-effective even as early as 2040 with other energy sourceshttps://oilprice.com/Alternative-Energy/Solar-Energy/Space-Based-Solar-Power-Will-Be-Economically-Viable-by-2040.html.
Silicon Valley is also investing more and more more and is betting high on nuclear fusion as a wonder to satisfy the AI energy hunger. “There is no way to get there without a breakthrough,” said Sam Altman, co-founder and CEO of the ChatGPT company OpenAI, at the World Economic Forum 2024 in Davos, Switzerland. “It motivates us more to invest in fusion,” he added.
In the meantime, Meta and other Big Tech companies are relying however, rely heavily on natural gas to power their massive AI ambitions. Meta is funding the development of 10 new gas-fired power plants for its largest AI data center campus ever in rural Louisiana. Meanwhile, Google is developing a massive natural gas facility, connected to a data center campus in North Texas.
Although Big Tech big clean-energy ambitions, these technologies are so still years away and real-time emissions continue to skyrocket. In 2024, Google admitted that because of the AI tree the company’s CO2 emissions in five years met 48% had increased. Google had previously promised to reach net zero by 2030, but officials have admitted that “as we further integrate AI into our products, reducing emissions may be a challenge.
Price TTF gas supply year 2027 (eur/MWh) – day cloud candle, log scale
Coal
(This week in the section below: the U.S. power grid and AI)
Global electricity demand from data centers is expected to reach 84 GW by 2027. That is a 50 percent increase from the 2023 level. AI’s share is 27% of this total, according to Goldman Sachs Research.
The power grid can’t keep up with AI. For decades, electricity demand grew slowly and predictably, allowing utilities comfortable margins to plan capacity years in advance. That model broke down almost overnight. Between 2023 and 2024 alone, utilities’ five-year peak summer demand forecasts rose from 38 GW to 128 GW, a more than threefold increase in one planning cycle.
Unlike traditional server loads, which are relatively flat and predictable, AI inference and training tasks generate sharp, almost instantaneous demand spikes. Large-scale GPU clusters can produce surges of produce hundreds of megawatts. Utilities have no historical model for this.
Energy companies no longer treat hyperscale data centers as large customers served by the grid, but rather as anchor infrastructure with which to build them together.
What follows is a look at what that shift actually requires at the system level. Why natural gas is currently the only instrument that can fill the gap at the speed and scale required. What that means for emissions commitments already being made today, and what the longer road to balancing this with storage, transmission and cleaner alternatives realistically looks like.
Why natural gas fills the gap today.
The U.S. currently produces about 40 percent of its electricity using natural gas, while coal and renewables make up the bulk of the remaining sources. However, neither can meet the demands of AI data centers that require stable, uninterrupted electricity at gigawatt scale and available day or night. The current U.S. grid was already under pressure before data centers came into the picture at all.
Voltage levels and customer classes of the U.S. power grid. Source:United States Department of Energy/Wikimedia Commons
Renewable energy is running up against a wall. Interconnection requests for new solar and wind projects have a median wait time of more than 4 years. In contrast, natural gas is cheap, abundant and already flows through an extensive pipeline network throughout the country. And, in unlike new solar or wind projects, gas power plants can be three to five years.
Three to five years is just not right now. The question is present now, however and the gap between what the grid can deliver today and what data centers need need is already felt. Energy companies are trying to meet this demand in various ways.
Others are gambling that the infrastructure tenants will attract. NextEra Energy, the largest renewable energy developer in the U.S., is partnering with ExxonMobil to develop a gas power plant of 1.2 GW to be built in the southeast. CEO John Ketchum summed up the industry’s new attitude: the AI sector is shifting toward “BYOG“, or build your own generation.
Rethinking the technical playbook
Electricity grids are designed to be predictable. Seasonal peaks, industrial cycles and population growth are modeled to plan future generation capacity.ToAI fitting into this picture fit into this picture requires much more than scaling.
Training a large language model means thousands of GPUs running simultaneously, with enormous power consumption for days or weeks, after which it quickly drops again. These peaks are unpredictable and can be extreme. Dispatch curves determine which plants run when, while reserve planning ensures that backup capacity is always available. Because of AI workloads, both are taxed in ways for which utilities do not have a historical model. The forecast crisis caused by this is visible in the numbers, with peak demand tripling between 2023 and 2024.
Developers routinely submit speculative interconnection requests for projects that never get built, flooding queues with phantom demand. ERCOT, the grid operator of Texas, developed an entirely new Adjusted Large Load Forecast methodology to explain exactly thisand: the gap between expected data center load and what is actually realized.
At factory level https://interestingengineering.com/science/us-sewage-treatment-natural-gasforces a redesign of the way in which generating agents are deployed. When an AI model responds on user demand, veroorzaakt het een plotselinge, grote stroompiek die bekend staat als een inferentiepiek. Gas peakers – power plants designed for short, powerful bursts – are now co-located with data center campuses specifically to accommodate these inference spikes where regular baseload power plants cannot respond quickly enough.
The physical grid bends under the same pressure. Transmission investments in many regions of the U.S. decreased steadily after 2015, making the system was already close against the limit was running. Now it must absorb demand on a scale for which it was never designed.
In Texas, CenterPoint Energy reported a 700% increase in large load interconnection requests between the end of 2023 and the end of 2024. In Virginia, another 50 GW of data center projects active in the queue. The cost reflects the tax.
Combined cycle gas turbines (CCGTs) capture waste heat to generate additional electricity, making them efficient enough for 24-hour demand. Installation costs for new CCGTs have nearly doubled to about $2,000/kWrelative to plants built only a few years ago.
The market data tell the same story. The price for clearing of the capacity market has also increased. It is the rate that utilities pay to maintain guaranteed power reserves for peak demand. INSURANCE. In PJM, the grid operator covering much of the Mid-Atlantic and Midwest, increased capacity market-clearing prices for delivery year 2026-27 to $329/MW – more than ten times the price of $28.92/MW, two years earlier.
The long game: issue costs
The gas plants being built today are not just a bridge to the AI boom; they are a commitment. With an average operating life of 30 years, they will still be well above any significant net-zero target on the books.
A natural gas power plant emits duringeits lifetime about 490 g of CO2 per kilowatt hourout. Scale that up to the gigawatts of new capacity being approved today approved and the emissions calculations become hard to ignore.
In the American South utilities plan next 15 years about 20 GW of new gas capacity. Of that, data centers in Virginia alone are, South Carolina and Georgia account for 65 to 85% of projected growth. The methane problem exacerbates this.
Natural gas infrastructure (drilling, pipelines, compression) leaks methane continuously, both accidentally and through intentional venting. Methane holds about 80 times as much heat as CO2 over a 20-year horizon, making emissions from a buildup of this magnitude difficult to quantifyand, but impossible to ignore.
It is the policy fault line now emerging between energy companies, hyperscalers with net-zero liabilities and regulators who are only beginning to understand what AI’s energy needs actually mean for decarbonization timelines.
Policies and incentives
Various structural mechanisms are introduced to eventually shift the equilibrium, but none of them work fast enough to solve the immediate problem.
On the storage side the Inflation Reduction Act of 2022 offers a taxg benefit of 30% for stand-alone energy storage systems and zero-emission generation facilities that come on line after 2024. The honor applies not only to generation technologies such as solar energy, but also to the storage infrastructure itself. This gives data center operators and utilities a financial reason to invest in battery systems, needed to use renewable energy 24/7.
On the generation side, nuclear power is emerging as a leading carbon-free option for AI data centers. This energy source has the ability always stable electricity supply. Google is already moving in this direction, striking a deal with NextEra to restart the 615 MW Duane Arnold nuclear power plant to be restartedvofor 24/7 carbon-free power.
Transmission remains the biggest problem. A study by the Department of Energy identified significant capacity gaps in transmission capacity in virtually every region of the US. Gapsfrom before the AI increase that will will require years of coordinated investment and permitting reform.
The way forward
AI’s energy demand is coming faster than the infrastructure that is currently in place.Gas power plants, transmission upgrades, storage, and the revival of nuclear power. None of that proceeds as fast as technology.
At some point, that gap must be closed. The question is whether that gap must be bridged through conscious investment and policy coordination, or by a slightly more painful alternative. Power shortages, delayed data centers and electricity bills that reflect the true cost of building a grid not designed for the moment. Ingenieurs en beleidsmakers werken aan het eerste.The clock is running on the last.
European car sales rise 11% as fuel shock drives demand for electric vehicles
Europese autoverkopen boekten in maart hun sterkste maandelijkse stijging in bijna twee jaar, toen er een sterke vraag ontstond naar volledig elektrische en hybride modellen. The increase in demand follows the conflict between the U.S. and Iran, allowing de energy flows through the bottleneck of Hormuz were disrupted. This led to sharply increased gasoline and diesel prices at the pump in Europe. Another problem isThat China is flooding the continent with cheap electric cars, undercutting already struggling domestic automakers.
Bloomberg was referring to data on new vehicle registrations from last month that showed an 11% increase to 1.58 million, while demand for EVs and hybrids continued to grow. De leveringen van elektrische voertuigen stegen met 42%, met groei in alle grote markten, waaronder een stijging van 66% in de Duitse EV-verkoop, gedreven door subsidies en betaalbaardere modellen.
The increase in sales in March provides relief for struggling European automakers who are struggling with a number of problems, including overcapacity, U.S. tariffs and a weak demand in the Chinese market.
The problem with Europe is that Brussels had the grand idea had Chinese brands like BYD and Geely to flood the continent with cheap EVs, undercutting competitors like VW, Porsche and Mercedes.
Data for the month also showed that BYD in March its European sales more than doubled to 37,580 vehicles and settled later this quarter is preparing production in itsstart new factory in Hungary. This means that China’s market share in Europe is increasing.
Tesla also participated in last month’s surge and saw a increase in car sales of 84% in March tot 52,600, putting it just ahead of BYD is so far this year.
All this suggests that with higher prices in Europe and elsewhere, EVs will regain consumer preference. By contrast demand in the U.S. remains muted now that federal subsidies have been eliminated.
Price Emission Rights – Dec-26 contract EEX (eur/t) – day cloud candle, log scale
RenewÂable
Demand for roof panels triples in Europe due to increase in gas prices
Solar panel installations on rooftops in Europe have increased sharply since the Middle East war. The conflict triggered a new oil and gas crisis that also caused electricity prices to rise.
Demand from households and businesses willing to install solar panels on rooftops soared in March and rose even faster in April as consumers seek to protect themselves from rising gas and electricity prices, according to equipment wholesalers and renewable utilities in northwestern Europe (source Reuters).
Demand for rooftop solar panels in Germany, the Netherlands and the UK has risen 30% to 50% since the start of the war in the Middle East on Feb. 28, according to several industry executives who spoke to Reuters.
Sales at German wholesaler Solarhandel24 more than tripled last month and will do so again in April, amid surging demand for rooftop solar panels, company representatives told Reuters.
German solar solutions provider Enpal also reported strong demand for rooftop solar panels. That led to a 30% order increase in March from a year earlier and an expected 33% increase in April.
UK company OVO Energy stated in an analysis last month that about 13.7 million homes in the UK are suitable for solar panels – nearly half of all residential buildings. If this area were fully utilized, 28.5 terawatt hours (TWh) of renewable energy could be produced each year. Enough electricity to charge all 1.2 million EVs in the UK for nearly 10 years, according to OVO Energy.
In addition, industry association SolarPower Europe found from research that thanks to solar energy, the EU saved €111.7 million daily in the first 17 days of the Middle East conflict. Savings from avoided fossil fuel imports.
Without solar power, the EU import bill for fossil fuels would be 32% higher than today, according to the study.
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