The price of oil “surged by more than 7%” yesterday, BBC News reports. The broadcaster continues: “Brent crude, the global benchmark for oil prices, rose to $102.02 a barrel (£75.91), before falling back to $98 during Monday afternoon trading in the US.” Outlets including Sky News, the Wall Street Journal and the Financial Times also cover the news. According to Reuters, US energy secretary Chris Wright “says oil prices are likely to hit their peak ‘in the next few weeks’ once ship traffic resumes through the strait of Hormuz”. Reuters says: “The price of physical crude oil cargoes for ‌prompt delivery to Europe hit a record high near $150 a barrel on Monday and those for Africa hit new peaks.” Meanwhile, Reuters reports that “oil prices fell in ​early Asian trade on Tuesday as signs of potential US-Iran dialogue to end their war reduced ‌concerns about supply risks”. 

Separately, the Financial Times says: “The last oil tankers to traverse the Strait of Hormuz before the outbreak of war will reach refineries in the coming days, in a pivotal moment analysts warn could herald physical shortages in Europe and the US within weeks.” The Times reports that “OPEC’s oil production fell by more than 25% in March, the biggest month-on-month drop on record”. Reuters says that “OPEC on Monday lowered its forecast for world oil demand in the second quarter by 500,000 barrels per day”. The Wall Street Journal says the blockade of the strait of Hormuz is helping to push US crude oil exports to a “record pace”. Bloomberg says: “European natural gas prices slipped in tepid early trading during Asian hours.”

Reuters reports that Fatih Birol, the head of the International Energy Agency (IEA), has said the group’s members are ready to tap global oil reserves. It adds that “the US, the world’s largest oil and gas ⁠producer, agreed to release 172m barrels from its strategic petroleum reserve”. Bloomberg adds that Birol said that “oil prices don’t yet reflect the severity of the unprecedented supply crisis caused by the Iran war, but they soon will”. 

MORE ON OIL

• Bloomberg reports that “Russia’s crude output was virtually flat in March after three consecutive months of declines”.
• Bloomberg says: “Chinese crude oil and natural gas imports fell in March, as the supply crunch in the Persian Gulf began to affect shipments.”
• The New York Times says: “The US did not extend a sanctions exemption that had allowed the sale of some Russian oil, stepping back from a contentious plan to try and contain global crude prices that was also providing an economic windfall to Moscow.” 
• BusinessGreen covers a new paper from thinktank Ember that “attempts to draw out the similarities, and the crucial differences, between the dual fossil-fuel supply shocks of the 1970s and 2020s”. 
• Al Jazeera has an explainer on “the growing split in the physical and on-paper oil markets”. 
• Bloomberg says: “A hoard of Iranian crude on tankers at sea and robust onshore stockpiles in China will provide a cushion for the nation’s independent refiners should a US blockade of the strait of Hormuz choke off flows.”

Ahead of this week’s spring meetings of the International Monetary Fund (IMF) and the World Bank, the Guardian says that governments “are being urged not to mention the climate, even as they address the current oil crisis”. The newspaper says that the meeting was due to agree a new “climate change action plan” (CCAP) for the World Bank before the current strategy expires in June. However, it says that this “may be shelved, along with substantive discussion of the climate crisis”.

The newspaper continues: “Senior staff of several international finance and development institutions have said the US has piled pressure on the World Bank, the IMF and other publicly funded institutions over the climate. They said that, although the climate was still on the agenda, people at a senior level were ‘self-censoring’ and removing the term from reports and projects. The Guardian understands some leading countries prefer not to push for a new CCAP.” Politico says that the US is the “largest shareholder in both the IMF and World Bank and exerts outsize influence over their operations”.

The IMF, World Bank and IEA have issued a joint statement on the Iran crisis, which Reuters says they call the “biggest ‌shock ever to the global energy market”. It continues: “IEA chief Fatih Birol told reporters after a meeting with IMF and World Bank leaders that several countries were holding onto stocks and imposing export restrictions, and appealed to all countries to let energy stocks flow to the markets. He did not name the countries.” Anadolu Ajansı says the statement “warn[s] fuel, fertiliser prices may stay high for a prolonged period”. According to the Wall Street Journal, the statement says the impact of the war is “substantial, global and highly asymmetric, disproportionately affecting energy importers, in particular low-income countries”.

Liu Zhenmin, China’s climate envoy for climate change, said at a conference in Vienna that the global energy crisis prompts an “urgent need for countries to rethink their energy security strategies and accelerate the transition to renewable energy”, reports state news agency Xinhua. Xinhua cites a report from Nomura saying that China’s “rapid expansion of new energy sources” can bolster the resilience of its export sector. A third Xinhua article says that the war in the Middle East exposed “vulnerabilities in Europe’s energy system” while strengthening the “political momentum for long-term energy transformation” in the region. Business news outlet Jiemian reports that many Chinese companies in the energy storage sector are seeing net profit growth during the first quarter amid overseas “geopolitical volatility” that has heightened the importance of energy security.

The New York Times says Americans could have more “affordable” vehicle options if the US lifts the embargo on Chinese-made new energy vehicles (NEVs). A Global Times editorial “praises” the UK government’s “open attitude toward Chinese automakers and its confidence in facing competition”, adding that the popularity of Chinese EVs is “an inevitable outcome of market choice”. Malaysia is introducing new restrictions on imported EVs to protect local manufacturers and push Chinese EV makers to assemble and manufacture vehicles in Malaysia, according to the New York Times. Ouyang Minggao, a professor at Tsinghua University, underscores the importance of ensuring NEVs are “truly powered by green electricity”, according to the Guangdong-based Time Finance.

MORE ON CHINA

• NEA head Wang Hongzhi underscores that building a new energy system is “key” to China’s strong energy nation goal, according to BJX News.
• Spanish prime minister Pedro Sanchez said on Monday that China should take a greater role in issues such as climate change, reports Reuters.
• Yicai: “Energy storage firms to seek new profit model as Chinese provinces cancel time-of-use electricity pricing.”
• The Philippines said that any decision to pursue oil and gas cooperation with China would “respect its sovereignty”, according to Reuters.
• China’s first project applying “offshore carbon injection for enhanced gas recovery” has entered construction, reports People’s Daily.

Ursula von der Leyen, president of the European Commission, has said that EU member states “must coordinate on energy prices”, amid a €22bn increase in the bloc’s “fossil fuel ‌bills” since the start of the Iran war, Reuters reports. According to the newswire, von der Leyen said that EU countries will coordinate member states’ gas storage filling and oil stock releases. It continues: “The commission is planning ​to publish proposals for energy price measures on 22 April, to be discussed by EU leaders at their informal summit ‌next ⁠week. Separately, the EU’s executive arm will present an electrification strategy before the summer, von der Leyen said as she stressed the need for structural measures to lower energy prices ​as well.” Bloomberg quotes von der Leyen saying that “we are paying a very high price for our over-dependency on fossil fuels and the grim reality for our continent is fossil-fuel energy will remain the most expensive options in the years to come”.

Separately, Reuters reports that “as part ⁠of a broader package of measures Brussels is preparing to respond ​to the energy price spike, the commission on Monday proposed changing ​EU state-aid rules to allow more public spending for industries hit acutely by fuel price increases, including agriculture, road transport and shipping within Europe. The changes ​would let governments cover part of the price increase companies have ​paid for their fuel or fertilisers, versus prices before the US-Israeli war with ‌Iran ⁠began on 28 February. The draft EU plan would also increase, to above 50%, the maximum share of aid that energy-intensive industries can receive to help pay their power bills.”

MORE ON EUROPE

• Euractiv says: “While the European Commission is due to assess the Emissions Trading System (ETS) and its Market Stability Reserve (MSR) by July, a group of ten countries is pushing to bring the timeline forward to May, signalling rising political urgency.”
• Bloomberg reports that “Germany is intensifying a push for greater flexibility in European Union vehicle-emission limits”. 
• BusinessGreen covers a report from Shoreline Wind, which finds that “by 2030, 86GW [gigawatts] of Europe’s operational onshore and offshore windfarms will be at least 20 years old”. 
• Reuters reports that the head of Italian energy group Eni has said the EU “should reconsider ​its plans to progressively ban imports of Russian ‌gas from the start of next year”. 
• Reuters reports that high petrol prices in Europe have “steered car buyers towards EVs”, leading to “to the first month of global ​EV sales growth this year”. Bloomberg says “Austrian electric vehicle registrations hit a record high last month”.
• The Guardian says: “While [new Hungarian leader Peter] Magyar’s Tisza party has promised to phase out Russian energy imports by 2035, the EU wants to move much faster – it hopes to end all Russian oil and gas by the end of 2027.”

Rolls-Royce has secured a £599m loan to develop the UK’s first small modular nuclear reactors, which will be located at Wylfa on the Welsh island of Anglesey, reports the Guardian. According to the newspaper, Rolls-Royce and Great British Energy-Nuclear “signed a contract that allows work to start immediately”. It continues: “The chancellor, Rachel Reeves, said the investment would help ‘strengthen our energy security, create skilled jobs and help to build a new generation of homegrown nuclear technology that will power our economy for decades to come’.”

BBC News says three small modular reactors will be built at the site, which will supply enough electricity to power the equivalent of 3m homes for more than 60 years. The Daily Telegraph says: “The £600m loan is in addition to £2.6bn that Reeves allocated to the scheme during last year’s spending review…The scheme is eventually expected to create 3,000 local jobs in Wylfa, Anglesey, as well as another 5,000 supply chain jobs across the country.” The Daily Mail calls the contract a “snub for British steel”, noting that the reactors’ parts could be made in the Czech Republic. The Press Association and BusinessGreen also cover the news. 

MORE ON UK

• According to the Independent, Great Britain’s gas stocks are projected to be sufficient to meet the demands of households and businesses this summer.
• The Daily Express says: “Kemi Badenoch ripped into [prime minister] Keir Starmer over Labour’s ‘dangerous and irresponsible’ energy policy in a furious Commons attack.”
• The Daily Telegraph says: “British factor­ies face a year-long wait for relief from soar­ing energy bills des­pite Rachel Reeves’s sug­ges­tion that help is on the way.”
• BBC News reports that the UK is seeing a “surge in solar panel demand amid rising energy costs”. 

The UK’s National Energy System Operator (NESO) is to offer households and businesses financial incentives to use more electricity when there is abundant renewable energy supply, reports the Financial Times. It says: “[NESO] on Tuesday said it was introducing the scheme ahead of summer when demand and supply in the electricity system will be affected by the proliferation of solar power…The mechanism to reward consumers for using more electricity is an extension of the ‘demand flexibility service’ introduced by NESO in the winter of 2022 to reward consumers for using less power amid concerns about shortages.” The Times covers the report on its frontpage with the headline: “Do your laundry at weekends to get free electricity, Britons told.” The Guardian also covers the story. In its own frontpage coverage, the Daily Telegraph says: “Solar power threatens to overwhelm electricity grid.”

Dave Jones, California’s insurance commissioner during 2011-18, writes in the New York Times that “big oil” wants the “legal shield” that gun manufacturers have. Jones notes that scientists and activists are taking oil and gas companies to court, but he adds that “the fossil fuel industry has mounted a carefully orchestrated campaign to stop these cases”. He continues: “The biggest prize the industry is after would come from Congress: total legal immunity from liability in climate cases.” Jones says that it is “rare for Congress to grant liability waivers to entire industries”, as it did for gun manufacturers. He continues: “If Big Oil were to secure immunity from liability for climate damage, the public would keep paying for the costs of climate change, while the fossil fuel companies most responsible for them would continue to pay nothing. As climate disasters mount, and the Trump administration slashes federal disaster response, the most important thing members of Congress can do is protect their constituents’ ability to make polluters pay.”

MORE COMMENT

• An editorial in Nature Climate Change commemorates the journal’s 15 year anniversary. It highlights “memorable climate change science published in our pages”. 
• Bloomberg columnist David Fickling writes that Thailand is facing an energy crisis due to declining domestic gas production and rising costs of imported LNG, but adds that the country has the potential to expand its solar power.
• Amena Bakr, the head of Middle East energy and OPEC+ research at Kpler, writes in Semafor that “Gulf oil producers can no longer rely on Hormuz”. 
• Josh Freed, is senior vice president for climate and energy at thinktank Third Way, writes in the Washington Post that the “path forward” for the US is “building resilience against energy shocks” rather than “choosing between fossil fuels and clean energy”. 
• Bruno Toledo, a specialist in international climate policy at ClimaInfo, writes for Backchannel that “more countries have plans to quit fossil fuels than you think”. 

In the Daily Telegraph, Tone Langengen of the Tony Blair Institute for Global Change, which has repeatedly called for more drilling in the North Sea, says the UK must “reduc[e] reliance on fossil fuels by accelerating electrification across transport, heating and industry”. She says: “Unless the underlying structure of our system is addressed, we risk being trapped in a cycle of shocks and rising costs.” Langengen concludes: “With the right strategy, Britain can build an energy system that is not only cleaner, but more resilient, more affordable and better suited to the realities of a volatile world.”

MORE UK COMMENT

• Nils Pratley, Guardian financial editor, has another comment advocating more drilling in the North Sea.
• Sam Richards, the CEO of Britain Remade, claims in the Times that “OpenAI snub shows UK’s energy costs are killing industry”.
• In the Daily Telegraph, economist Roger Bootle argues that “if Labour is serious about growth, it must open up the North Sea”. 
• Conservative MP Tom Tugendhat and Austrian parliament member Veit Gendler write in the Daily Telegraph that “supply shocks from the strait of Hormuz closure will fuel public anger unless governments reform”. 
• Journalist Caelainn Hogan writes in the Guardian about public opinion on energy prices in Ireland, under the subheading “the Iran war has exposed the country’s reliance on fossil fuels – and its wilful neglect of people’s basic needs”.  
• Amber Woodward, international public affairs manager at Centre for Net Zero, writes in BusinessGreen that “the UK is well-positioned to benefit from its increasing know-how in grid flexibility and system optimisation that could then be deployed elsewhere – including China”. 

This edition of the Daily Briefing was written by Ayesha Tandon, with contributions from Anika Patel and Henry Zhang. It was edited by Simon Evans.

Subscribe for free.