Major oil and gas companies have “high hopes for a quick reopening of the strait of Hormuz, but they have few illusions about a return to normal for the Gulf energy industry after more than three months of blockage”, Agence France-Presse reports. It says: “Even if the deal between Iran and the US to end the Mideast war holds, analysts say the old market certainties are gone for good – and the new risks will probably require costly adaptions.” The newswire says that closure of the strait has “exposed the vulnerability of Gulf supply chains” and “now the prospect of Iranian tolls on tanker and cargo traffic”. It continues that Iran’s foreign ministry spokesman Esmaeil Baqaei has announced “service fees” on ships passing through the strait, which “companies are likely to pass on to customers”. Stephen Innes, an analyst at SPI Asset Management, tells AFP: “This war showed the oil and gas industry that Hormuz risk is no longer just a geopolitical headline. It is a logistics, insurance, storage and balance sheet risk.”

MORE ON ENERGY CRISIS

• The Times: “Strait of Hormuz deal sends oil price below $80 a barrel.”
• Associated Press: “Iran war is a wake-up call for south-east Asia’s energy sector, IEA report says.”
• Oil tankers heading towards Africa have “U-turned” and switched their destinations to the strait of Hormuz following news of the US-Iran deal, reports Bloomberg.
• The “developing world won’t completely entrust energy security to the US”, the CEO of the US’s largest liquified natural gas (LNG) export company tells Reuters.

The UK’s energy minister has said that costs will be the “absolute central factor” in awarding the next round of offshore wind subsidy contracts, as the “government seeks to fend off political challenges to its clean power strategy”, reports the Financial Times. The newspaper reports that minister Michael Shanks said yesterday that price would be “far more [central] than it has been” in the upcoming auction round, noting that it is “due to open this summer against a backdrop of higher electricity bills and calls for ‘net-zero’ targets to be watered down”. According to the FT, Shanks told RenewableUK’s Global Offshore Wind summit in Manchester: “As we look forward to AR8 [the auction round] opening, we need to recognise that although securing offshore wind will be critical to our future energy goals, it cannot and it will not be at any price. I want to be clear today: price will be the absolute central factor in AR8, far more than it has been in any other round.”

MORE ON UK

• A frontpage Times story says “Ed Miliband ‘ghosted Keir Starmer by refusing to take his calls’.” It adds the net-zero secretary is expected to “back the prime minister’s rival in any Labour leadership contest”.
• Bloomberg says that the transition from North Sea oil and gas to renewables is tipped to be a central issue in Aberdeen’s byelection tomorrow. The Financial Times calls it a “referendum on oil and gas”.
• The Times: “Plug-in solar panels on sale ‘within months’ after safety nod.”
• Bloomberg: “UK regulator weighs cutting datacenter power use at peak times.”
• A frontpage story in the climate-sceptic Daily Telegraph story says a new government deal with the EU will see surplus wind power sold abroad, a situation it describes as “wasteful”.
• Another Daily Telegraph story labels the BBC a “Labour mouthpiece” after one of the newspaper’s stories claiming that the government is planning to phase out tumble dryers under “net-zero rules” was called “fake news” by a guest on the BBC Radio 4 Today programme.

China’s power generation from fossil fuels rose 2.1% in May from a year earlier, according to data released by the National Bureau of Statistics, as “lower wind speeds curbed renewable energy growth”, reports Reuters. A 13% year-on-year increase in hydropower “failed to stem the increase in thermal power generation, which rose to meet power demand growth”, adds the newswire. It also cites Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, saying that wind conditions in China during March, April and May were worse than those recorded in any of the past 10 years. China’s overall power generation rose 4.2% from a year earlier, reaching 784 terawatt-hours, reports industry news outlet BJX News. Wind power generation increased by 0.5% year-on-year in May, while solar rose 12.1%, adds the outlet. State-run China News Service reports China’s new-energy vehicle (NEV) production reached 1.5m last month, up 17.8% year-on-year.

Meanwhile, China’s National Energy Administration (NEA) has called for improving the integration and utilisation of renewable energy, promoting its local consumption, accelerating the construction of large-scale wind and solar power bases, and speeding up the improvement of “market mechanisms suited to a high share of renewable energy”, reports BJX News. The Hong Kong-based South China Morning Post (SCMP) says China’s factories are less concerned about power shortages despite expectations for higher demand due to a “strong El Niño”. Since the last shortages in 2021 and 2022, China’s renewable energy capacity has surged and its grid can move “growing volumes of electricity across regions” to address local shortages, adds the outlet.

MORE ON CHINA

• SCMP: “EU carbon tariff sows havoc in China as steel firms grapple with ‘absurd’ rules.”
• China is looking to “clean up” its recycling industry amid a “surge in spent clean energy products”, says Caixin.
• Reuters covers heavy rainfall in Guangxi and Guangdong, which triggered floods and forced thousands to relocate, adding that heavy rains are “usual at this time of year”. “Ferocious” rains “battered six provinces” and “submerg[ed] cities”, says Caixin.
• The Chinese Academy of Social Sciences’ Han Meng writes a China Daily commentary that Europe’s industrial challenges are due to “high energy costs, expensive labour and heavy regulation” rather than Chinese industrial policy.
• Global Methane Hub CEO Marcelo Mena tells China Daily that China’s methane control shows cutting emissions is in other countries’ own interest for energy security.

Several publications cover new research finding that there are parts of the world where favourable conditions for coral reef survival persist, despite the “devestating” impact of climate change globally. The newspaper says: “As spiking ocean temperatures are devastating reefs around the world, a handful of scientists have found a reason for cautious optimism. They’ve used artificial intelligence to detect sheltered pockets where cool currents, reduced exposure to sunlight and locations outside cyclone paths mean corals are more likely to survive.” The research was led by the Wildlife Conservation Society, an NGO, and presented yesterday at the Our Ocean Conference in Mombasa, Kenya, the New York Times says. It adds that the paper is currently undergoing peer review for publication in the journal Environmental Research Letters. There is further coverage in Reuters, Climate Home News and Inside Climate News.

The Financial Times has a special report on the “long way back” from the energy crisis driven by the US-Iran war. It says: “Even though Friday’s planned agreement is only an interim deal, oil prices began falling immediately. They are now lower than at any point since the earliest days of the conflict, with Brent crude sinking below $80 a barrel in London on Tuesday. But after the biggest energy crisis in history, there was no quick route back to normal, said oil and gas industry executives, traders and analysts. They said it would take months to restart oil and gas flows and rebalance shaky markets – if the truce holds.” It quotes Mike Rosenberg, a professor at IESE Business School, as saying that “ultimately, the risk of further instability in Iran is likely to weigh on the region for years”. Elsewhere, a Lex column in the Financial Times says the world could face an oil “glut” as the “oil shortage is ending”.

MORE COMMENT

• Climate scientist Prof Andrew Dessler writes on his Substack, the Climate Brink, about the impact of a “coordinated campaign” by lobbyists to make the scientific field of climate event attribution “look suspect”.
• Ilisapeci Vakacegu, policy and advocacy programmes manager at the Pacific Farmers Organisation and a former climate negotiator for Fiji, writes in Backchannel that UN climate summits must do more to support family farming organisations.
• A Guardian editorial says that concern about climate change is among the reasons that people are having fewer children globally.
• An editorial in the Times praises prime minister hopeful Wes Streeting for pledging to allow new drilling in the North Sea, claiming: “Given that the ­exploration ban is depriving the Treasury of revenue and killing jobs while doing nothing to reduce global warming, he deserves credit for that move.” [See Carbon Brief’s North Sea factcheck.]
• The Daily Mail has a two-page “special investigation” from Aberdeen, where the transition from North Sea oil and gas to renewables is set to feature in the city’s byelection tomorrow.

This edition of the Daily Briefing was written by Daisy Dunne, with contributions from Henry Zhang and Anika Patel. It was edited by Robert McSweeney.

Subscribe for free.