Somalia poised to begin its first offshore oil drilling operations with Turkey’s help

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By bne IntelliNews April 7, 2026

Somalia is set to begin its first offshore drilling campaign this month, with Turkey’s state-backed deepwater drillship “Çağrı Bey” due to arrive off the Horn of Africa country’s coast on April 10, marking Ankara’s first overseas deepwater drilling operation.

The drilling push follows the completion of 3D seismic work by the “Oruç Reis” research vessel, which Turkey’s energy ministry said surveyed three offshore blocks covering nearly 5,000km² in Somali waters. Turkish officials described the acreage as three offshore blocks, two located about 50km from the Somali coast and a third roughly 100km offshore.

Somalia’s petroleum minister, Dahir Shire, described the start of drilling as a “historic milestone in our offshore energy journey,” while Somali foreign affairs minister Ali Omar said the campaign could support resource-led growth and deepen Turkey’s role as a long-term development partner if commercially viable volumes are found. Anadolu Agency said the comments reflect Mogadishu’s effort to frame the project not only as an exploration event but as part of a broader economic recovery strategy.

The offshore campaign rests on a formal bilateral framework signed in March 2024, when Turkey and Somalia concluded an intergovernmental agreement and MoU covering onshore and offshore oil and gas cooperation. The deal spans exploration, evaluation, development and production, as well as midstream and downstream activities, including transport, refining and sales.

Turkey’s energy ministry said at the time that the aim was to help bring Somalia’s resources “to the Somali people” while strengthening Ankara’s energy presence in the Horn of Africa.

Resource estimates remain highly uncertain because Somalia is still a frontier basin with minimal drilling history, but several widely cited industry and Somali government-linked sources point to significant upside.

TGS says offshore Somalia is one of the world’s last frontier basins and notes that only two exploration wells have ever been drilled along its roughly 1,000km offshore margin. A Somali National Economic Council paper, citing Spectrum/TGS, said un-risked resources in the Somali Basin could exceed 30bn barrels of oil, while more recent industry estimates cite that figure for offshore Somalia as a whole.

That 30bn-barrel figure refers to un-risked or prospective resources inferred from seismic and geological modelling, not booked commercial reserves. In practical terms, the significance of the “Çağrı Bey” mission is that it begins the process of testing whether the seismic structures identified in the survey phase actually contain recoverable hydrocarbons in commercial quantities.

The first well has been identified as Curad-1, according to specialised industry reporting. Energy Capital & Power reported that the target depth could reach 12,000 metres, with drilling at Curad-1 planned in water depths associated with Somalia’s deepwater margin.

The strategic significance extends beyond hydrocarbons. Turkey has been one of Somalia’s closest external partners for more than a decade, investing in infrastructure, education and health, and maintaining a military presence that includes a major training base established in 2017. The energy partnership followed a separate defence and maritime cooperation accord, and Turkish naval protection has accompanied parts of the seismic campaign.

For Somalia, the economic prize is potentially large but remains speculative. Commercial production would require not only a discovery but also appraisal drilling, development planning, export or domestic market infrastructure, fiscal and regulatory clarity, and continued security support.

Turkey has accelerated upstream engagement since early 2026, signing exploration agreements with ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX) and BP (LSE:BP), with another international partnership expected to be announced.

With the recent addition of the “Çağrı Bey” and the “Yıldırım”, Turkey’s fleet now includes six drillships, alongside seismic vessels “Oruç Reis” and “Barbaros Hayrettin Paşa”, placing it among the world’s larger offshore exploration fleets.

Beyond Somalia, Turkey plans further expansion. Seismic studies are scheduled in Pakistan’s maritime zones this year, while in Libya it has secured exploration rights in two fields—one offshore and one onshore—in partnership with Repsol (BME:REP), holding a 40% stake.

Turkey aims to raise output from its national oil operations to around 500,000bpd by 2028, with a longer-term target of 1mnbpd, as part of efforts to strengthen energy security and expand its global upstream footprint.

Gas discovery off Egypt's coast comes at a critical moment for Iran war

Copyright Gregorio Borgia/AP

By Una Hajdari with AFP

Published on 07/04/2026 - EURONEWS

ENI and Egypt have announced a significant gas discovery in the Eastern Mediterranean — a potential boost for Cairo as the Iran war sends energy import costs rocketing.

Italian energy giant ENI and Egypt have announced a significant natural gas discovery in the Eastern Mediterranean, offering Cairo and the wider European continent a potential lifeline as the Iran war sends energy import costs soaring.

Preliminary estimates point to around 2 trillion cubic feet of gas in the Temsah field off Egypt's Mediterranean coast, ENI said in a statement on Tuesday.

The discovery also includes 130 million barrels of petroleum condensates, according to Egypt's petroleum ministry, which it said forms part of a broader push to boost domestic production and cut the country's import bill.

The Denise W well is now being prepared for testing. Once complete, more wells will be drilled and an offshore production platform built before the field can be brought online.

Denise W 1 is an exploratory well drilled within the Temsah Concession, sitting 70 kilometres offshore in 95 metres of water depth and less than 10 kilometres from existing infrastructure.

ENI operates it with a 50% working interest alongside BP, which holds the remaining 50%, through their joint venture Petrobel.

Relate

Iran war's toll on Egyptian energy bills

The timing could hardly be more pressing. Egypt's natural gas supplies from Qatar and Israel have been severely disrupted since the Iran war escalated, forcing Cairo to introduce a raft of energy-saving measures — among them a business curfew, higher fuel prices and slower government spending.

Prime Minister Mostafa Madbouly said last month the conflict had nearly tripled Egypt's natural gas import bill, from $560 million (€515mn) to $1.65 billion (€1.52bn,) per month.

The discovery revives memories of Egypt's last major offshore breakthrough.

In 2015 the Zohr field, the largest on the Mediterranean and holding an estimated 30 trillion cubic feet, raised hopes that Egypt could become energy self-sufficient and a major exporter.

Those ambitions have since been scaled back. Egypt has pivoted towards positioning itself as a regional processing and transit hub, using its liquefaction terminals to route gas from neighbouring countries, including Cyprus.

Last month brought another discovery, this time onshore — Egypt and Apache Corporation announced a find in the Western Desert expected to yield 26 million cubic feet per day.

Whether the Temsah find proves large enough to meaningfully ease Egypt's energy crunch will depend on how quickly it can be brought into production and how long the war drags on.

 

Russia's Yamal LNG Ships First Cargo to China in Months as EU Ban Nears

By Tsvetana Paraskova - Apr 07, 2026

The Yamal LNG export plant in Russia has shipped its first cargo to China in five months as the EU launches in a few weeks a stepwise plan of banning imports of Russian natural gas.  

Yamal LNG, operated by Russia’s top LNG producer and exporter Novatek, had the Geneva carrier loaded in recent days and en route to China with an estimated time of arrival May 15, according to LSEG data cited by Reuters.

Yamal LNG shipments would be allowed into the EU for a few more months as the export facility is not under sanctions, unlike Arctic LNG 2, which is confined to selling into China in defiance of U.S., EU, and UK sanctions.  

The cargo on the Geneva carrier would be the first shipment of Yamal LNG to China since November 2025. So far this year, Yamal LNG shipments have all gone out to Europe, according to LSEG data quoted by Reuters.   

Russia raised its LNG exports in the first quarter of 2026 from a year earlier, as shipments to Europe rose ahead of the April 25 start date for the EU ban on short-term spot LNG supply from Russia. 

The EU is banning, effective April 25, imports of LNG from Russia under spot contracts as part of its wider stepwise ban on all Russian gas imports by the end of 2027. A full ban will take effect for LNG imports from the beginning of 2027 and for pipeline gas imports from the autumn of 2027.  

Top Russian officials said last month that Moscow would redirect LNG exports away from the EU without waiting for the full ban to take effect. 

“A decision was made that part of the LNG currently supplied to Europe will be redirected to other markets where constructive, pragmatic relations are being built with our country, where there is demand and [where there is] the opportunity to conclude long-term contracts,” Russia’s Deputy Prime Minister Alexander Novak said in early March, as quoted by the Interfax news agency. 

Yet, analysts have told Reuters that logistics challenges, shipping costs, and the structure of long-term contracts would restrict Russia’s ability to swiftly pivot to markets outside the EU. 

By Tsvetana Paraskova for Oilprice.com 

CRIMINAL CAPITALI$M

Suspicious Oil Bets Before Trump’s Iran Announcement Under Scrutiny

By Kurt Cobb - Apr 06, 2026

• Large trades placed minutes before a major policy announcement generated significant profits, prompting insider trading concerns.
• 
  
• New York’s Martin Act could enable prosecution without proving intent, giving state authorities unusual leverage.
• 
  
• The case highlights broader concerns about financial markets benefiting from geopolitical events and regulatory gaps.
• 
  

Currently unknown investors netted tens of millions of dollars in profit by placing huge trades in the oil futures markets just 15 minutes before President Donald Trump announced he was extending the deadline for strikes on Iran's energy infrastructure by five days to allow for nonexistent "negotiations" (which then turned into an additional 10 days—which meant little since U.S. and Israeli bombing simply continued). Because these investors bet on a fall in oil prices, they made money when the price of oil dropped sharply after the announcement.

The same or other investors traded heavily in stock index futures before the Iran announcement and profited handsomely as stock futures soared. All these investors could end up in legal jeopardy for engaging in insider trading if they were somehow given a heads-up about the announcement. Were their trades just coincidental to the announcement? It seems unlikely, but that's the big question an investigation would answer.

Those traders may have imagined that they would never have to answer for their conduct. The U.S. Department of Justice under any Trump-appointed attorney general won't investigate any matter involving possible illegal conduct linked to Trump. And, the traders may believe they would likely escape prosecution by a future administration as it struggles to investigate and bring charges before prosecutors run out of time. The statute of limitations—that is, the deadline for bringing charges in such matters at the federal level—is five years

But those traders may have miscalculated. It turns out New York state has a powerful and effective tool for prosecuting securities fraud called the Martin Act. And, Letitia James, attorney general for New York state, has actually been on the case for months. (Yes, it's the same Letitia James who successfully sued Trump for fraud and who has been targeted through bogus, unsuccessful indictments by the Justice Department.)

What a minute, you must be saying, how can it be possible for James to have been on the case for months when the suspicious trades took place a couple of weeks ago? The answer is that James started investigating highly profitable, impeccably timed trades linked to Trump announcements after Trump's reversal on tariffs last April. While there has been no information about whether these latest trading incidents will be included in the New York investigation, it's hard to imagine that investigators will just ignore them.

But how can New York state have jurisdiction? Isn't this a federal matter? First, states have securities fraud laws. Some laws are lax, but New York's Martin Act is expansive and powerful. Second, of those suspicious trades, the biggest trade in oil took place on the New York Mercantile Exchange. I'll bet you can guess where that's located. Actually, it turns out that all of the trades took place on exchanges that have offices in New York City. It seems the traders involved weren't thinking about the legal jurisdiction under which their trades would fall.

Perhaps the most powerful element of the Martin Act is that prosecutors do NOT need to prove intent. That is, they don't need to demonstrate what was going on in the mind of the defendant. Federal securities fraud cases are much harder to make because intent must be established. In Martin Act prosecutions, the prosecutor needs only to prove that the result was deceptive or fraudulent, regardless of what was in the mind of the perpetrator.

Maybe you're wondering why anyone other than wealthy traders ought to be concerned with such matters, especially with a war raging in the Persian Gulf and a vital link to world energy exports, the Strait of Hormuz, closed, thereby depriving global industrial society of a huge portion of its fossil fuel energy needs. My answer is that the ever-increasing power of the rigged casino of international finance de-emphasizes the world of physical resources and production, the things that actually matter to our physical wealth and well-being. Instead, the wealthy make themselves richer by manipulating the symbols of wealth (stocks, bonds, and other financial instruments such as futures contracts) while the material circumstances of the poor and middle classes are undermined with every passing day.

If there are no rules for the rich, only the rest of us, then everything in society becomes optimized for the rich, including the fighting of expensive and, as it turns out, for some, highly profitable wars, regardless of the consequences for society as a whole.

By Kurt Cobb via Resource Insights

The UK; Next Battleground for Robotaxis

By City A.M - Apr 06, 2026,

• Waymo is expanding its robotaxi service to London, testing whether autonomous driving can scale profitably outside the U.S.
• 
  
• The company’s model prioritizes software and data over manufacturing, but high costs and uncertain demand remain major hurdles.
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• Regulatory challenges, urban complexity, and consumer trust will determine whether driverless mobility becomes mainstream.
• 
  

A black Jaguar SUV with no one behind the wheel pulls up on a London street. It’s electric and equipped with Waymo’s autonomous driving system. A passenger gets in, selects a destination on their phone, and the car pulls smoothly into traffic. Within the next few years, this scene could move from novelty to normality as Waymo, Google’s parent company Alphabet’s self-driving car division, plans to launch its robotaxi service in the UK capital, with testing already underway and a pilot service scheduled for April 2026.

The arrival of driverless ride-hailing would not simply mark a technological milestone. It could also test whether autonomous mobility can ever become a profitable business. London is already one of Europe’s largest markets for app-based transport: Transport for London licenses more than 100,000 private-hire drivers, while millions of journeys are booked each week through platforms such as Uber and Bolt.

Waymo’s expansion reflects a broader industrial shift already visible in parts of the United States. In cities such as San Francisco and Phoenix, robotaxis are already carrying fare-paying passengers on digitally booked journeys. Each trip is not just a ride but a real-world test of whether its business model holds up.

Vehicles or software?

At stake is a bigger question about where the value sits: in the companies that build the vehicles, or those that write the software that drives them? And the question is not confined to cars. When software becomes the core of a product, the balance of power tends to move with it — as smartphone makers learned when profits flowed to the firms behind the operating systems.

Waymo’s story is a lesson in digital strategy. When software becomes the core of a product, the winners are not necessarily the best manufacturers. They are the ones with the best code, and the most data to improve it. That can change who leads in any industry.

In car manufacturing, firms have long competed on engineering, scale and brand. Autonomous driving challenges all three. Waymo does not manufacture cars; it builds the system that drives them — and it is delivering that system at a vast scale. The company expects to deliver about 1 million rides a week this year in cities such as San Francisco, Los Angeles, Phoenix and Miami. In total, its vehicles have logged more than 125 million fully autonomous miles on U.S. roads, with few reported safety incidents.

Waymo now generates more than $350 million in annual recurring revenue. But it has yet to prove it can deliver sustained profits. For Alphabet, the question is: how long will it keep funding a business that has yet to prove its returns?

The sums are large. So is the potential upside. If autonomous mobility reaches mass adoption, the auto industry could look very different indeed. Instead of owning cars, more people might pay for rides. Fewer cars would then be needed, but they would be used more intensively. And revenue would shift from one-off car sales to recurring income from selling rides.

The same pattern is playing out in other industries as products become services. Waymo is betting on that shift. The company has chosen to operate its own ride-hailing service rather than simply supply its driving system to carmakers. In several U.S. cities, it runs fleets directly through its Waymo One service.

That brings control — but also cost. It means owning the vehicles, managing the service and dealing directly with riders. That is not cheap. In 2021, a vehicle equipped with Waymo Driver was estimated to cost between $130,000 and $150,000 — far more than a conventional car. It is a far more costly model than that of Uber or Lyft, which provide the app and leave drivers to supply the vehicles.

Adoption, meanwhile, remains uncertain — in part because the technology still has limits. In clear weather and predictable traffic, autonomous vehicles perform well. In tougher conditions — like heavy rain, sudden obstacles or broken traffic lights — the system struggles. The final 5 per cent of the driving challenge can require 95% of the engineering effort.

The technology is only one risk. There is also demand: will people trust a driverless car enough to give up owning one? Regulation is another uncertainty. Cities can slow or block expansion. A serious accident can halt operations overnight. And because rollouts happen one city at a time, progress can stall just as quickly as it begins.

Waymo’s planned arrival in London will bring these questions to Europe’s mobility market. European regulators and city authorities will have to decide how autonomous services fit within existing transport systems. The economic model may also face a different test: Europe’s dense historic centres and narrow streets could make scaling autonomous fleets harder than in the wide, grid-based cities where the technology has expanded in the United States.

For now, that makes the economics of driverless cars hard to pin down. As with many new technologies, the early years are messy. Money pours in. Companies expand quickly. Losses mount. Then, weaker players fall away. Autonomous vehicles still look to be in that early stretch, so by the time the dust settles, the sector could look very different from today.

But when software runs the product, being big is not enough. What matters is who can build the better system — and improve it faster than everyone else. That will decide who wins, in mobility and in other industries facing the same shift.

By CityAM

California’s Battery Boom Is Rewriting Power Markets

By Leon Stille - Apr 06, 2026

• Grid-scale batteries are rapidly moving from a niche role to replacing gas plants in peak demand, as seen in places like California where they now supply a large share of evening power.
• 
  
• Unlike traditional power plants, batteries can be deployed quickly, scaled easily, and respond instantly, making them a more flexible solution for balancing renewables.
• 
  
• Falling costs and improving technology are undermining the need for gas as backup, shifting power systems toward storage-driven flexibility rather than fossil fuels.
• 
  

For years, one argument has dominated the debate around renewables: they are intermittent, and therefore require large-scale, dispatchable backup—usually in the form of gas-fired power plants. It is a compelling argument. It is also becoming increasingly outdated.

Because while much of the discussion still treats batteries as a marginal technology, real-world systems are starting to show something very different. Storage is not just filling small gaps. It is beginning to replace the role traditionally played by large, flexible fossil generation. And it is doing so faster than most forecasts expected.

California’s Live Experiment

The clearest example comes from California. On March 29, batteries on the CAISO grid delivered around 12.3 GW of power during the evening peak, covering roughly 43% of total demand. That is not a niche contribution. That is system-level impact.

To put that into perspective, this is equivalent to the output of roughly 15 to 20 combined-cycle gas plants, or several large hydroelectric facilities. More importantly, it is happening exactly when skeptics argue batteries cannot perform—during peak demand, after solar generation has dropped. And this is no longer a short-lived spike.

Batteries maintained more than 20% of grid demand for several hours during the evening ramp, effectively replacing what would traditionally have been one of the most gas-intensive periods of the day. This is precisely the window where gas plants have historically been considered indispensable. The system did not just cope. It adapted.

Built at Manufacturing Speed

What makes this even more significant is how quickly it happened. California’s battery capacity has grown from around 1.3 GW in 2020 to around 17 GW today. More than 90% of that capacity was deployed within the last five years. That is not megaproject speed. That is manufacturing speed.

And that distinction matters. Traditional dispatchable generation, whether gas or nuclear, takes years, often decades, to plan and build. Batteries, by contrast, can be deployed in months to a few years, scaled incrementally, and located exactly where flexibility is needed. This fundamentally changes how power systems can evolve.

Not Just California

California is not an isolated case. South Australia has been demonstrating similar dynamics for years. With high shares of wind and solar, supported by grid-scale batteries like the Hornsdale Power Reserve, the region has repeatedly shown that storage can provide frequency control, peak shaving, and reliability services once dominated by fossil generation.

Texas is now following a similar trajectory. Battery capacity on the ERCOT grid has expanded rapidly, playing an increasingly important role in managing peak demand and balancing variability from renewables.

China, meanwhile, is scaling battery storage alongside massive renewable deployment, integrating storage directly into solar and wind projects to stabilize output and reduce curtailment.

Different systems, different regulatory environments, same underlying trend. Batteries are moving from the margins to the core of grid operations.

The Old Assumption Is Breaking

The traditional argument against renewables rests on a simple premise: because wind and solar are variable, they require firm backup that can be turned on and off at will. Historically, that role has been filled by gas.

But what California and others are now showing is that flexibility does not have to come from combustion. It can come from storage. Batteries respond faster than gas plants. They can ramp instantly. They can absorb excess generation and release it exactly when needed. And when deployed at scale, they can reshape entire demand curves.

The evening peak, long seen as the Achilles’ heel of solar-heavy systems, is increasingly being managed without defaulting to gas.

Duration Is Expanding

A common counterargument is that batteries only work for short durations. That may have been true a few years ago. It is becoming less so. Four-hour battery systems are now standard in many markets. Longer-duration storage is being developed and deployed, with technologies ranging from advanced lithium-ion configurations to entirely new chemistries and storage concepts.

At the same time, system intelligence is improving. Smarter grid management, demand response, and hybrid systems combining solar, wind, and storage are extending the effective duration of flexibility far beyond what a single asset could provide. In practice, it is not just about how long a battery can discharge. It is about how the entire system is orchestrated.

Economics Are Moving in One Direction

Just as important as the technical shift is the economic one. Battery costs have fallen dramatically over the past decade, following a trajectory similar to solar. While there have been short-term fluctuations due to supply chain pressures, the long-term trend remains firmly downward.

This is critical because it reinforces the same dynamic seen with renewables: once built, batteries provide system services without ongoing fuel costs. That stands in stark contrast to gas plants, where operating costs remain tied to volatile fuel markets.

In a world of recurring geopolitical shocks, that difference is not theoretical. It is structural.

Rethinking the “Backup” Narrative

All of this points to a deeper shift in how power systems are evolving. The idea that renewables need fossil backup is being replaced by a more nuanced reality: renewables need flexibility, but that flexibility does not have to be fossil-based. It can be electric. It can be distributed. And increasingly, it can be deployed faster and at scale.

This does not mean gas disappears overnight. But it does mean its role as the default balancing mechanism is being steadily eroded

From Skepticism to System Reality

The skepticism around batteries is understandable. Power systems are complex, and reliability matters. But the evidence is increasingly clear. Batteries are no longer a supporting technology. They are becoming a central pillar of modern grids.

They are replacing peak generation. They are stabilizing frequency. They are enabling higher shares of renewables. And they are doing so at a pace that traditional infrastructure cannot match.

What makes this shift particularly striking is how quietly it is happening. There are no grand announcements declaring the end of gas as a balancing tool. There is no single moment where the system flips. Instead, there is a steady accumulation of capacity, capability, and confidence. A few gigawatts here. A few hours of coverage there. A peak shaved. A ramp managed. Until suddenly, the system looks very different.

A New Backbone

For decades, the backbone of power systems was defined by large, centralized plants that could be turned on and off as needed. That model is not disappearing overnight.

But it is being complemented, and increasingly challenged, by something more flexible, more modular, and faster to deploy. Batteries are not just supporting the grid. They are starting to become its new backbone.

And the faster that reality is recognized, the sooner the debate can move beyond outdated assumptions, and toward a system that is not only cleaner, but fundamentally more adaptable to the shocks of a volatile world.

By Leon Stille for Oilprice.com

Petrobras Shakes Up Leadership Amid Governance Transition

By Charles Kennedy - Apr 06, 2026

Brazil’s state-controlled oil major Petrobras has announced a set of leadership changes, reshaping both its board of directors and executive management as it navigates a critical governance transition.

The company confirmed that its board of directors has elected Marcelo Weick Pogliese as chairman, replacing the previous leadership on an interim basis until the next general shareholders’ meeting. The move follows earlier disclosures at the end of March and signals continued adjustments at the top of the company’s governance structure.

At the executive level, Petrobras approved the immediate departure of Claudio Romeo Schlosser from his role as Executive Director of Logistics, Commercialization, and Markets. He will be replaced by Angélica Laureano, whose appointment takes effect on April 7 and runs through April 2027 under a unified mandate.

In parallel, William França, currently Executive Director of Industrial Processes and Products, will temporarily assume additional responsibilities overseeing Energy Transition and Sustainability. This follows Laureano’s shift into her new role and underscores Petrobras’ ongoing effort to maintain continuity in its energy transition strategy during the leadership reshuffle.

The changes extend further into Petrobras’ governance pipeline. The Brazilian federal government, the company’s controlling shareholder, has nominated economist Guilherme Santos Mello to join the board, replacing Bruno Moretti. The government has also indicated that Mello should be considered for the role of board chairman, with a formal decision expected at the company’s annual general meeting scheduled for April 16.

Mello brings significant policy and financial expertise to the table. He currently serves as Secretary of Economic Policy at Brazil’s Ministry of Finance and holds leadership roles at key state institutions, including the Brazilian Development Bank (BNDES) and Pré-Sal Petróleo S.A. His academic background and government ties highlight the continued influence of Brasília over Petrobras’ strategic direction.

These developments come at a time when Petrobras is balancing shareholder returns with political expectations and long-term energy transition goals. The company has faced recurring shifts in leadership tied to changes in Brazil’s political landscape, often resulting in recalibrations of its investment strategy, fuel pricing policies, and capital allocation priorities.

The latest reshuffle suggests Petrobras is positioning itself ahead of its upcoming shareholder meeting, where broader strategic direction - including its role in Brazil’s energy transition and upstream investment focus - may come into sharper focus.

By Charles Kennedy for Oilprice.com

Oil Supply Shock Ripples Through Fertilizer, Plastics, and Tech

By Tsvetana Paraskova - Apr 06, 2026

The worst supply shock in the history of the oil market is spilling over to critical supply chains, threatening shortages of medical supplies, fertilizers, semiconductors, and everyday consumer goods, including textiles, footwear, and cosmetics.

When the Strait of Hormuz is shut, it’s not only Asian refiners scrambling for crude oil to turn into fuels.

The naphtha, ammonia, urea, and helium supply that the Middle East would typically export via the most critical energy chokepoint is now trapped in the Persian Gulf. Petrochemicals producers in Asia, which are key exporters of plastics and other derivatives to the global markets, are cutting production and operations, declaring force majeure left and right. Without plastics, adhesives, lubricants, solvents, and even materials to make plastic caps and packaging for basic consumer goods, what began as an oil supply disruption is turning into a crisis along the supply chains of key industries, which will hit consumers with higher prices and/or shortages soon.

The most immediate disruption is seen in Asia. But Asia is a major exporter of all these goods and processed petroleum derivatives, which means shortages and higher prices are spilling over to other regions, too.

“Much like during COVID, the shock unfolds sequentially rather than simultaneously – a rolling supply disruption moving westward,” J.P. Morgan said in a note last week, as carried by CNN.

Asia’s petrochemicals industry is already feeling the crunch. Across Asia, shortages of naphtha and other key petrochemicals feedstocks due to the Iran war have already forced petrochemicals firms to curb output.

Asia’s petrochemicals sector is highly dependent on naphtha, liquefied petroleum gas (LPG), and methanol from the Persian Gulf, so the war in the Middle East is creating a major supply shock in Asia, which is the most vulnerable to supply disruptions from the Gulf region, trade credit insurance group Coface said last month.  

“With 60 to 70% of Asian naphtha passing through Hormuz, a prolonged disruption could redefine flows, costs and, perhaps, the very geography of the global petrochemical industry,” said Joe Douaihy, sector economist, Coface. 

Commodity intelligence firm ICIS noted in the second week of the war that “Asia’s petrochemical dominance sits atop a feedstock system that is dangerously concentrated. A single geopolitical shock can reverberate across an entire industrial continent.”

We are now in the sixth week of the war, the Strait of Hormuz is still de facto closed, and supply chains are reeling from the shock of slashed crude, naphtha, LNG, LPG, fertilizer, ammonia, urea, and helium supply.

Asia feels it first, but concerns and shortages spread to the West, too.

U.S. farmers plan to plant less corn, wheat, and rice acreage, as fertilizer prices have surged following the supply shock in the Middle East.

“The interruption of crop-nutrient supplies from the Gulf comes just as planting season begins in the Northern Hemisphere, threatening yields and harvests through the year and pushing food prices higher,” the International Monetary Fund (IMF) said last week.

Shortages of helium, of which Qatar produces a third of the global supply, are reverberating through the tech industry. Chip makers are scrambling for supply, with Qatar’s production sites hit by missiles and what’s already produced unable to leave the Strait of Hormuz. Helium is vital for the manufacturing of semiconductors and medical imaging devices.

Medical supplies are also threatened, and not only in Asia. The UK could face days until some supplies run out, the chief executive of NHS England, Sir Jim Mackey, told LBC radio last week.

The IMF last week warned that “The war is also reshaping supply chains for non-energy and critical inputs.”

The closure of the Strait of Hormuz, the mother of all disruptions, is affecting not only fuel supply and fuel prices globally. It has hit the processing and manufacturing of materials critical for food production, medicine, technology, and consumer goods, exposing the world’s dependence on petroleum derivatives for a normal everyday life.

By Tsvetana Paraskova for Oilprice.com