
Three steps forward, two steps back for global energy supply. The MOU between the United States and Iran has effectively unravelled over the past week, with negotiations deteriorating rapidly and giving way to a renewed phase of full-scale hostilities. This abrupt reversal has placed global energy markets on high alert, reviving concerns over supply security in the Middle East and shipping access through the Strait of Hormuz. Correspondingly, oil prices have surged once again, with WTI and Brent crossing USD80/bbl and USD85/bbl respectively. History suggests that conflict-related premiums tend to persist well beyond the initial military escalation, particularly when there is little visibility on a diplomatic resolution. We therefore expect Brent crude to remain supported above USD80/bbl throughout the third quarter, as the more consequential implications of the failed US-Iran peace process continue to unfold against a backdrop of peak Northern Hemisphere summer demand and seasonally depleted inventories. In short, the Middle East energy shock is far from over.

AI and electrification are reshaping energy demand. Alongside supply disruptions, structural demand drivers like AI data centres and the electrification of industry, transport, and heating are supercharging global energy and electricity consumption. Based on International Energy Agency (IEA) estimates, global electricity demand from data centres rose 17% y/y in 2025. In markets with high AI adoption, that figure is even higher; the US, for example, saw c.50% of its total electricity demand growth in 2025 come from data centres. The electrification of road transport is also driving structural growth in electricity demand, with IEA data showing a substantial 38% y/y increase in electricity demand from EVs in 2025. As a result, electricity as a percentage of global primary energy consumption has steadily increased over the years, and we expect this trend to persist for the foreseeable future.
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