Saturday, March 21, 2026

 


Iran strikes Israeli nuclear town in retaliation for Natanz attack amid escalating conflict

An Iranian missile struck the Israeli town of Dimona, home to a nuclear facility, injuring dozens in what Tehran said was retaliation for strikes on its Natanz nuclear site. The attack comes amid escalating regional tensions, including two failed Iranian missile strikes on the US‑UK base Diego Garcia, some 4,000 km from Iran – launches that suggest Tehran’s missiles may have greater range than previously thought.



Issued on: 21/03/2026 -
FRANCE 24

An Israeli soldier uses a torch to inspect the damage after Iranian missile barrages struck Dimona, amid the U.S.-Israel conflict with Iran, in southern Israel March 21, 2026. © Ilan Assayag, Reuters

An Iranian missile on Saturday hit the Israeli town of Dimona, home to a nuclear facility, in what the Islamic republic said was retaliation for strikes on its own nuclear site at Natanz.

Dimona hosts a facility just outside the main town widely believed to possess the Middle East's sole nuclear arsenal, although Israel has never admitted to possessing nuclear weapons.

Iran's atomic energy organisation earlier accused the US and Israel of hitting the Natanz enrichment complex, but noted there was "no leakage of radioactive materials reported".

The Israeli army told AFP there had been a "direct missile hit on a building" in Dimona, with Magen David Adom first responders saying their teams treated 33 people injured at multiple sites, including a 10-year-old boy in serious condition with shrapnel wounds.

"There was extensive damage and chaos at the scene," paramedic Karmel Cohen said.

The Israeli military said that "interception attempts were carried out" after the missiles were detected.


Images shared by Israeli media showed an object hurtling out of the sky at high speed before crashing into the town.

Iranian state TV said the attack was a "response" to the earlier strike on Natanz.

Following that attack, UN nuclear watchdog chief, Rafael Grossi, had repeated a "call for military restraint to avoid any risk of a nuclear accident".

The Natanz facility hosts underground centrifuges to enrich uranium for Iran's disputed nuclear programme and was already damaged in last year's June war.

Asked about Natanz, the Israeli military said it was "not aware of a strike".

The Israeli military also said Saturday that it had struck a facility embedded within a Tehran university "utilised by the Iranian terror regime's military industries and ballistic missiles array to develop nuclear weapon components and weapons".
Hormuz base

Three weeks of heavy US-Israeli bombardment appear to have done little to blunt Iran's ability to retaliate with missile and drone attacks across the region.

The United Arab Emirates said Saturday it faced aerial attacks after Iran warned it against allowing attacks from its territory on disputed islands near the strategic Strait of Hormuz.

Iran has choked off the vital waterway, which is used for a fifth of global crude trade during peacetime.


Admiral Brad Cooper, head of US Central Command, said US warplanes had dropped 5,000-pound bombs on an underground facility on Iran's coast that was storing anti-ship cruise missiles, mobile launchers and other equipment, leaving Iran's ability to threaten the waterway "degraded".

"We not only took out the facility, but also destroyed intelligence support sites and missile radar relays that were used to monitor ship movements," Cooper said in a video statement, revealing details of a strike first announced on Tuesday.

A statement from the leaders of mainly European countries, including the UK, France, Italy and Germany, but also South Korea, Australia, the UAE and Bahrain, meanwhile condemned the "de facto closure of the Strait of Hormuz by Iranian forces".

"We express our readiness to contribute to appropriate efforts to ensure safe passage through the Strait," they said.

US President Donald Trump has slammed NATO allies as "cowards" and urged them to secure the strait.

Foreign Minister Abbas Araghchi said Tehran had only imposed restrictions on vessels from countries involved in attacks against Iran, and would offer assistance to others that stayed out of the conflict.

The standoff in the strait has sent crude oil prices soaring, with a barrel of North Sea Brent crude up more than 50 percent over the past month and now comfortably more than $105.
Remarkable endurance?

Analysts say Iran's Islamic government has survived the loss of its top leaders and that its strike capacity is proving more durable than expected.

"They're showing a lot of resilience that we didn't perhaps expect, that the US didn't expect, when it took this on," Neil Quilliam of Chatham House told the London-based think tank's podcast, adding the Islamic republic had deep roots.


Tehran, meanwhile, marked the end of Ramadan as the war was entering its fourth week.

Iran's supreme leader traditionally leads Eid al-Fitr prayers, but Mojtaba Khamenei, who came to power earlier this month after his father Ali Khamenei was killed, has remained out of the public eye.

Instead, the head of the judiciary, Gholam Hossein Mohseni Ejei, attended prayers at central Tehran's overflowing Imam Khomeini grand mosque.

"The atmosphere of the New Year was spreading through the city," said Farid, an advertising executive reached by AFP through an online message.

But "the thought that some people could be dying right at the New Year dinner table was painful", he added.

Shiva, a 31-year-old painter, told AFP that the "only common feeling these days is uncertainty".

"The only night we felt genuinely happy was the night Ali Khamenei was reportedly killed," she said.
Diego Garcia

Iran launched what a UK official told AFP was an "unsuccessful" ballistic-missile attack on the US-UK military base on Diego Garcia, an island in the Indian Ocean around 4,000 kilometres (2,500 miles) from Iran.

If the salvo had reached its target it would have been the longest-range Iranian strike yet. Before the war, according to the US Congressional Research Service, Washington was aware of Iranian missiles that could reach 3,000 kilometres.

Israel's military chief Eyal Zamir said Iran had used a "two-stage intercontinental ballistic missile with a range of 4,000 kilometers".

"These missiles are not intended to strike Israel," he added in a televised statement. "Their range reaches European capitals."

The attack "shows that they can still move these mobile launchers around, undetected, spin up and fire without being struck", former UK Royal Navy commander and defence expert Tom Sharpe told AFP.

On Friday, the UK government said it would allow Washington to use its bases in Diego Garcia and Fairford in England to launch strikes on Iranian sites targeting the Strait of Hormuz.

The UK official confirmed that the attempted missile strike took place before this announcement.

(FRANCE 24 with AFP)


'Projectile' hit 350 metres from Bushehr nuclear reactor - IAEA


The International Atomic Energy Agency has said that "following information from Iran of a projectile incident on Tuesday evening, the IAEA can confirm that a structure 350 metres from the Bushehr NPP reactor was hit and destroyed".

 
A file picture of Bushehr unit 1 (Image: ASE)

The statement, posted on social media channel X on Wednesday at 16:31 GMT, added Director General Rafael Mariano Grossi as saying: "Although there was no damage to the reactor itself nor injuries to staff, any attack at or near nuclear power plants violates the seven indispensable pillars related to ensuring nuclear safety and security during an armed conflict and should never take place."

There are no details from the IAEA about what the projectile was that struck the area of the Bushehr Nuclear Power Plant, which is on Iran's Persian Gulf coast, about 480 miles south of Tehran. The plant has one operating unit and two further Russian-designed units under construction.

Director General of Russian state nuclear corporation Rosatom, Alexei Likhachev, had earlier said the strike happened at 15:11 GMT on Tuesday, and hit the area near the facility's metrological service "in close proximity to an operating power unit".

He said: "The safety of human life is our absolute priority. We had previously partially reduced the number of personnel at the construction site of Bushehr Nuclear Power Plant Units 2 and 3. About 250 employees and their families were safely evacuated from Iran. Children of employees were preemptively evacuated before the armed conflict began. About 480 of our comrades remain there. Preparations for the third personnel evacuation are under way".

In the statement issued by Rosatom, he added that "we categorically condemn what happened and call on the parties to the conflict to make every possible effort to de-escalate the situation in the Bushehr nuclear power plant area".

Background

The USA and Israel launched attacks on Iran on 28 February, saying they were targeting Iran's leadership and its military infrastructure. Iran has retaliated and the conflict is on-going. IAEA Director General Grossi has urged a return to diplomacy, saying that "to achieve the long-term assurance that Iran will not acquire nuclear weapons and for maintaining the continued effectiveness of the global non-proliferation regime, we must return to diplomacy and negotiations".

The first unit at the Bushehr plant was connected to the grid in 2011. It is a Russian-designed VVER unit with a capacity of 915 MWe. Two further units featuring VVER-1000 units are under construction - unit 2 had first concrete poured in 2019 and the core catcher installed in 2024. In January the third tier of the inner containment building for unit 2 was installed.

At an event at the International Atomic Energy Agency's General Conference in September 2024, Iran suggested unit 2's then target date for operation was 2029. According to Russia's Rosatom, unit 3 is also under construction.

In September 2025, Rosatom and the Atomic Energy Organisation of Iran signed a memorandum of understanding for cooperation in the building of small modular reactors in Iran. The country says it has an ambition for 20 GW of nuclear energy capacity by 2041.

IAEA warning of risks of losing off-site power



The Zaporizhzhia nuclear power plant has had to rely on a single backup power line - and the subcritical Neutron Source Installation at the Kharkiv Institute of Physics and Technology and the Chernobyl site have both had to activate emergency backup diesel generators in recent days.
 
IAEA experts have been stationed at Zaporizhzhia since September 2022 (Image: IAEA)

In its latest update on the situation, the International Atomic Energy Agency (IAEA) said that the six-unit Zaporizhzhia plant, which has been under Russian military control since early March 2022, had to rely on its recently repaired 330 kV backup line for several hours to allow maintenance work on its main power line.

IAEA Director General Rafael Mariano Grossi said: "The ZNPP’s fragility in the face of limited off-site power options is putting constraints on electrical maintenance. It is another indication of the critical importance of robust, diverse and dependable off-site power infrastructure to ensure nuclear safety and security."

Since the war began, the Zaporizhzhia plant has lost access to off-site power 12 times, during which emergency backup diesel generators (EDGs) have had to provide the power required for essential safety functions.

The IAEA also reported that the State Nuclear Regulatory Inspectorate of Ukraine had informed it that "during the night of 11-12 March, attacks targeting and destroying an electrical substation close to the subcritical Neutron Source Installation at the Kharkiv Institute of Physics and Technology resulted in its disconnection from the electrical grid until 13 March. During this outage, the facility relied on EDGs".

IAEA officials at Chernobyl said that the following day, the site was disconnected from its main 750 kV transmission line for nearly 24 hours, with the Ukrainian nuclear regulator saying the cause was an attack on an electrical substation. The "disconnection and subsequent fluctuations in the electrical grid automatically activated the EDGs supplying the New Safe Confinement and Interim Spent Fuel Storage Facility 1. The generators were manually switched off after 15 minutes".

Grossi said: "These episodes underscore how grid instability and the vulnerability of off-site power is affecting nuclear safety and security at Ukraine’s nuclear facilities."


Renewables Aren’t the Problem—Market Design Is

  • Renewables can be cheaper than old fossil plants when fuel costs are factored in, but new fossil and nuclear plants may still compete depending on future fuel prices.

  • Current electricity markets set prices based on the last (usually gas) unit needed to meet demand, meaning high gas prices inflate costs for all electricity users, even if renewables produce cheaper power.

  • The grid infrastructure and market rules were not designed for high renewable penetration or increased demand, leading to inefficiencies and affordability crises, particularly in gas-reliant countries like the UK and the U.S.

Donald Trump and crew view renewable energy as an expensive fraud. British industrialists claim that the UK’s green goals make the country too expensive. New York politicians see green energy fueling an affordability crisis. We have argued, on the other hand, that proponents of renewables should push them not because they are greener but rather because they are more economical and less risky than the alternatives. Not everywhere every time, but enough of the time. So, who is right? When customers do not see the benefits, is that failure due to renewable costs or to poor market design and muddled government policy? Don’t buy the bullet points handed out by lazy politicians who are looking for a quick fix.

Now, let’s define the issues. First question: Are new renewable projects cheaper providers of electricity than 30-40 year old fossil plants? That’s like comparing the monthly charges on a new car to those on a 20-year-old jalopy with no monthly finance charges (all paid off) and low collision insurance (car has no resale value).  Absolutely cheaper to keep the old car until it falls apart. But fuel constitutes at least half the cost of those fossil-fueled units, and some renewable power is cheaper than the fuel costs. So, the answer is “sometimes”.

Next, we’re not getting into quasi-religious disputes about the need to reach a 100% green power goal in order to save the world. Shooting for 100% rankles traditionalists, generates opposition and may reduce grid flexibility and raise costs. So why make it an issue? If renewables are as good as their proponents say, they will eventually drive out most of the fossil units, anyway. Patience is a virtue

Unfortunately, the jalopy analogy becomes less and less relevant because the electricity industry has to build new power plants to meet increasing demand, so the next question is: are new renewable plants more economical to own and operate than nuclear or fossil-fueled units? Let’s look at the estimates from two standard sources.

The Energy Information Administration (EIA) produced its latest projections in 2025 and published them under the aegis of the Trump administration, so either the Trump people did not notice or they represent a cautious view of the prospects for renewables.  The EIA predicts “levelized cost”, meaning the average cost per MWH generated (operating, fuel, and capital costs) over the lives of the plants. Here are the base case projections for selected means of generation coming into service in the next few years:

EIA PROJECTIONS

Source: EIA, Levelized Cost of New Generation Resources in the Annual Energy Outlook 2025.

Now, you might rightly be skeptical, considering the uncertainty of long-term projections, but consider that much of the equipment for plants that go into operation over the next few years has been ordered, so we should have a reasonable idea about capital costs, which do not change over the life of the plant. But we have a shaky handle on fuel costs over a 30-year lifetime. If gas costs rose 50% over the estimate, that gas-fired generator would produce electricity as expensive as the nuclear plant. If gas costs fell to half of the estimate, the gas generator would be barely competitive with photovoltaic solar with storage and still way above photovoltaic solar and onshore wind.

The legendary banking house, Lazard, makes a detailed annual analysis, too. In its 2025 report, it unambiguously stated, “On an unsubsidized … basis, renewable energy remains the most cost-competitive form of generation.” Lazard produces estimate ranges and its methodology differs from the EIA,  so pay more attention to the order of ranking than the absolute numbers when comparing to EIA numbers. We show the average estimate and the low end of the range, which we suspect reflects projects most likely to succeed to completion.

Source: Lazard, Levelized Cost of Energy June 2025.

Either way, except for offshore wind, renewables are competitive in cost. The competitiveness of gas units depends on the price of gas. Nuclear is so expensive it’s out of the ballpark altogether. Interestingly, Lazard also calculates the cost of community/industrial solar (local solar on rooftops), which at the low end of its range comes surprisingly close to being competitive with utility-scale power. That should scare the legacy utilities.

Now for the problem, neither the grid nor its managers have prepared for the new age. Place- specific renewables require a transmission link to consumers. What have the transmission owners and operators been preparing for over the past decades?  For more competitive markets and allocation of capacity via financial instruments? Certainly not for an avalanche of renewables and burgeoning demand.

As for price to users, the principal markets in the UK and the USA employ an auction that sets the market price based on the price required to bring online the last unit required to fill the demand quota. That unit is, invariably, fueled by natural gas. Meaning that the price of gas sets the price offered to all generators, even if gas generation makes up only a small part of the total. Under those circumstances, the renewable (or nuclear) generators can pocket a big profit thanks to the high price paid to the last gas generator, and the customer gets no benefit from lower renewable costs. Gas sets the price of renewable energy. That market mechanism was designed before renewables amounted to anything. In the UK, where gas fuels much of the generation, the country has put off construction of sufficient gas storage facilities, so gas price and supply are at risk from foreign events, such as a war in the Persian Gulf.

In short, don’t fix the affordability problem by getting rid of the cheapest generation options. Focus on market structure and the grid, instead. And, no, we don’t know why Bill Gates plans to build a nuclear power plant in Wyoming. Maybe he has money to spare.

By Leonard Hyman and William Tilles for Oilprice.com

Why Electrification Is Europe’s Only Real Hedge Against Oil Shocks

  • Europe cannot shield itself from global oil and gas shocks (like Hormuz disruptions) through more domestic drilling.

  • The real solution is structural: accelerate electrification, renewables, storage, and grid integration to reduce exposure to volatile global fuel markets.

  • Current policies undermine this shift—especially high electricity taxes vs. gas—and must be reformed alongside stronger, more integrated power systems.

Tensions in the Strait of Hormuz are still rising, and Europe is still falling back on the same instinct: worry about supply, brace for higher prices, and revive talk of more domestic oil and gas production. It is an understandable reflex. It is also the wrong one.

Europe cannot drill its way out of globally traded fossil fuel price shocks. It cannot wish away maritime chokepoints. And it cannot keep pretending that more North Sea exploration will shield it from crises whose price effects are set far beyond European waters.

If Europe wants real protection from the next Hormuz shock, it needs to stop leaning on fossil fuel nostalgia and start accelerating the one strategy that actually reduces vulnerability: electrification, backed by renewables, storage, stronger grids, and a better-functioning internal electricity market.


The North Sea Will Not Save the Day

The appeal of more North Sea drilling is obvious. It sounds practical. It sounds tough-minded. It sounds like Europe is taking control.

But oil is priced globally, and gas remains tied to wider market dynamics, infrastructure constraints, and international competition. A barrel produced in European waters does not stop prices from reacting to instability in the Gulf. More output may help at the margin, but it does not shield households and industry from geopolitical tremors.

Europe’s real problem is not simply where fossil fuels come from. It is that too much of its economy still depends on them in the first place. As long as heating, transport, and industry remain hooked on oil and gas, Europe will keep importing volatility along with energy.

The Real Exit Is Structural

The answer, then, is not to source fossil fuels a little differently. It is to consume less of them. That means faster electrification of transport, buildings, and industrial processes. It means deploying renewables and storage much more aggressively. And it means treating electricity as the backbone of resilience rather than burdening it like an afterthought.

This is what makes electrification strategically different. It does not just reshuffle dependence. It starts reducing the role of volatile fuel markets altogether. A home heated by a heat pump is less exposed to gas shocks. A transport fleet running more on electricity is less vulnerable to oil disruptions. Industry that shifts from combustion to power has a clearer path to domestic renewables, storage, and flexible demand.

That does not make Europe immune. It makes every future shock matter less.

Europe Is Still Taxing the Wrong Thing

And yet Europe continues to undermine this shift with one of its strangest policy distortions: electricity is often taxed far more heavily than gas. That is not a technical detail. It is a strategic own goal.

In the first half of 2025, electricity taxes and levies across EU member states were on average roughly twice as high as those applied to gas. In some countries, the gap was far worse. Germany and Hungary taxed electricity about three times more than gas. Belgium did so by roughly six times. Croatia by around fourteen. These are not just accounting quirks. They are powerful market signals.

When electricity is loaded with heavier taxes than fossil gas, households are less likely to install heat pumps, drivers are less likely to switch to electric vehicles, and industry has less incentive to electrify. Europe ends up claiming it wants electrification while making it harder to justify on the monthly bill. That makes no strategic sense for a continent trying to reduce dependence on imported fossil fuels.

The Grid Is Now a Security Issue

Tax reform alone, however, is not enough. Electrification only delivers its full value if Europe can move electricity cheaply and reliably across borders. That is where grid expansion, market reform, and deeper integration come in.

For years, Europe’s internal electricity market has quietly improved resilience by allowing countries with strong hydro, nuclear, wind, or solar output to support others during tighter periods. That model now needs to go much further.

More interconnection means more flexibility. More storage means more shock absorption. Better transmission means local shortfalls matter less. A more integrated market allows Europe to pool strengths instead of fragmenting into national energy anxieties whenever the system comes under pressure.

In practical terms, Spanish solar, Nordic hydro, French nuclear, offshore wind, batteries, and flexible demand need to work more as parts of one continental system and less as national trophies.

Populism Is Getting in the Way

That is why debates over electricity market reform, grid integration, and bidding zones matter so much. Some countries that have long benefited from cross-border trade are now resisting reforms that might slightly rebalance the gains. Sweden is a clear example. Having profited significantly from low-carbon generation and electricity exports, it is now pushing back in ways that look less like sober policy and more like familiar populist reflex.

That is especially frustrating because the likely downside is often overstated. Even if bidding zone reform leads to somewhat higher prices in certain areas, those increases are marginal compared to the broader benefits of a more efficient European market. Countries like Sweden would still continue to benefit significantly from cross-border trade.

In other words, some of the resistance is not really about fairness. It is about defending comfortable advantages while pretending the common market should only be common when the arithmetic stays flattering. That is not strategy. It is rent-preservation with a patriotic soundtrack.

Europe’s Real Hedge

Europe does not control the Strait of Hormuz. It does not control global oil prices. And it does not control every geopolitical flare-up that sends traders into panic mode. What it does control is its own energy architecture.

It can stop taxing electricity more heavily than gas. It can accelerate electrification. It can build renewables and storage faster. It can modernize and integrate grids. And it can stop pretending that another round of North Sea enthusiasm will somehow make fossil fuel volatility disappear. Europe’s biggest energy security lever has been hiding in plain sight all along. Not more drilling but electricity.

And the faster Europe treats it that way, the less every future Hormuz crisis will be able to shake the continent.

By Leon Stille for Oilprice.com

 

Azerbaijan Moves to Defuse Tensions With Iran After Drone Strikes

  • Azerbaijan has shifted from threats of retaliation to active diplomatic engagement with Iran.

  • Baku fears wider instability, especially in Nakhchivan and among Iran’s large Azeri population.

  • Higher energy prices may boost Azerbaijani revenues, even as security and inflation risks grow.

Diplomatic engagement has replaced aggressive rhetoric, as Azerbaijan strives to keep tensions with neighboring Iran from boiling over again.

In the immediate aftermath of Iranian drone strikes in the Azerbaijani exclave of Nakhchivan on March 5, officials in Baku adopted a bellicose stance, warning that further acts of aggression against Azerbaijan would result in “Iron Fist” retaliation. They also demanded that those responsible for the drone strikes be held accountable.

Over the last 10 days or so, however, Baku’s tone has softened considerably, and officials have kept open diplomatic channels of communication. On March 17, Azerbaijani Foreign Minister Jeyhun Bayramov checked in with his Iranian counterpart Abbas Araghchi.

According to an Azerbaijani government statement, their phone conversation “emphasized that civilian objects should not be targeted during the ongoing war.” Bayramov also reiterated Azerbaijan’s support for a quick, negotiated end to the conflict, and reminded Araghchi about an Iranian pledge to carry out a full investigation into the March 5 drone attacks.

Several factors are encouraging Azerbaijan to pursue a de-escalation strategy. One, according to Zaur Shiriyev, a non-resident scholar at the Carnegie Russia Eurasia Center, is Nakhchivan’s relatively isolated position vis-à-vis the Azerbaijani mainland. Writing in a Carnegie-published analysis on the impact of the war so far on the South Caucasus, Shiriyev noted that “air and land links [between Azerbaijan and Nakhchivan] depend heavily on transit through Iran.” Any sustained disruption of those Iranian connections, then, could have serious economic ramifications for the exclave.

Baku’s desire for a quick end to the war is connected in part to concern about Iran’s potential fragmentation in the event of the total collapse of the Islamic Republic’s governing system. Ethnic Azeris number approximately 20 million in Iran, roughly a quarter of the overall population, and are primarily concentrated in northwestern areas of the country. The Islamic Republic’s demise would stand to destabilize Azeri-dominated areas, perhaps prompting a wave of refugees seeking relative safety in Azerbaijan. Or Baku could face pressure to intervene on behalf of Iranian Azeris, if they became embroiled in conflict with other ethnic groups in Iran, Shiriyev suggested.

“Regime survival could represent the least destabilizing outcome for Iranian Azerbaijanis,” Shiriyev wrote.

The energy crisis precipitated by the prolonged US-Israeli bombing campaign stands to benefit Azerbaijan. A prolonged spike in oil and gas prices could generate upwards of $7.5 billion in additional annual energy export revenue for Baku, Shiriyev estimated. At the same time, the disruption is expected to cause inflation in Azerbaijan and across Eurasia to skyrocket. 

While Azerbaijani officials seem to be succeeding for now in keeping bilateral tensions in check, there is evidence that elements within the Iranian leadership are intent on destabilizing Azerbaijan.

The tech giant Meta, operator of Facebook and Instagram, recently announced that since the start of 2026, it had deleted over 700 accounts and three pages on the two social media platforms after determining they were operated by malicious actors “associated with Iran and targeting Azerbaijan,” according to a March 17 report published by the Azerbaijani government-connected news outlet Minval.

By Eurasianet

Qatar LNG Hit Turns Into Multi-Year Crisis

Qatar’s LNG outage will span years. Repairs to damage at Qatar’s massive Ras Laffan complex will take three to five years to complete, according to QatarEnergy CEO Saad al-Kaabi, cited by Reuters, turning what markets initially treated as a wartime disruption into a lengthy structural supply loss.

About 17% of Qatar’s LNG export capacity is now effectively sidelined for years to come.

Up until now, traders were focused on the timing. When flows might resume, when the Strait of Hormuz might reopen, when force majeures would be lifted. This update shifts the likely assumptions from weeks or even months to years. It is the most significant LNG production disruption in years.

Markets reacted accordingly. European gas prices surged as much as 35% on the news, briefly doubling pre-war levels, and the forward curve has repriced higher across the board. This isn’t just about near-term scarcity. It’s about a multi-year hole in supply from the world’s largest LNG exporter.

Qatar had halted exports earlier this month after initial strikes and the effective closure of the Strait of Hormuz. At one point, nearly 20% of global LNG flows were sidelined. Now the damage is physical, not just logistical, and far harder to reverse.

Asia is first in line to feel it. Long-term buyers in Japan, South Korea, and China depend heavily on Qatari volumes. Europe, already running low on storage after winter, will be forced to compete harder for spot cargoes just to rebuild inventories ahead of next winter. That’s a familiar—and expensive—dynamic.

The bigger shift is with expectations. The LNG market was supposed to loosen this year, with new U.S. supply coming online. That narrative is now gone. A chunk of global capacity has effectively been erased for several years, tightening balances just as demand remains stubbornly resilient.

Seventeen percent doesn’t sound catastrophic—until you realize there’s no easy replacement.

By Julianne Geiger for Oilprice.com

 

Global Supply Shock Exposes the Myth of Energy Independence

  • The Strait of Hormuz disruption is hitting all regions: Asia faces the biggest supply shock, Europe struggles with import dependence and LNG competition, and the U.S. sees surging fuel prices.

  • Asia is scrambling for alternatives (including Russian oil and more coal use), while Europe is losing LNG supply to higher-paying Asian buyers and remains highly exposed.

  • Even energy-secure U.S. markets are affected, as global crude prices drive sharp increases in gasoline and diesel, highlighting the interconnected nature of energy markets.

The shock halt to oil and LNG supply at the Strait of Hormuz is reverberating to all major energy-consuming regions and exposes the energy security issues of Asia, Europe, and the United States.

No region can be insulated from the biggest disruption in the history of the oil market, though some suffer more than others in terms of supply crunch. But all see soaring fuel prices and a very real threat of accelerating inflation, and no interest rate cuts soon.

Asia experiences the biggest and most imminent disruption, while Europe loses the competition with Asia for LNG supply and remains very much dependent on gas and oil imports. The U.S., while theoretically the most secure in terms of domestic supply, is seeing unprecedented spikes in diesel and gasoline prices as the refining business remains closely linked to global oil prices.       


China Buffer amid Supply Shock in Asia

The shock to supply in Asia is massive. This is the region most dependent on LNG and crude oil supply from the Middle East, most of which passes – or at least used to pass – through the Strait of Hormuz.

Asian buyers are racing to cover supply needs with purchases of now-allowed Russian oil on tankers and crude from much further afield, including the United States, West Africa, and Brazil.

“While SPR releases in Japan, South Korea and potentially more countries in Asia are expected to help refiners overcome the immediate supply shortage—likely for only several weeks from late March into April—this policy band-aid will not be able to address the supply gap over a prolonged period,” Muyu Xu, senior crude oil analyst at Kpler, said earlier this week.

Asian countries have hiked the use of coal for power generation, where possible, to try to limit the loss of 20% of global LNG flows due to the shutdown in Qatar and the de facto closure of the Strait of Hormuz.

Asia is attracting most flexible-destination LNG cargoes away from Europe amid renewed competition for supply.

But prices are so high that many countries in the region are buying only if they have to avoid emergency situations.

Interestingly, China, the world’s top oil and LNG importer, is not as exposed as the massive import figures would suggest. Chinese reliance on Qatari LNG is an estimated 6% of its gas supply mix, while it has built a large crude stocks buffer at low oil prices over the past year.

Still, if this “mother of all disruptions” drags on for more weeks, as it is increasingly looking that way, China would feel the full extent of the shock, too.

Europe Dependent, Once Again

Asia, as the top consuming region, is feeling the physical squeeze, but Europe’s situation may be even more precarious. It not only depends on imports for half of its supply, but it is also a secondary victim of the spike in oil and gas prices, as Asia now commands a premium and attracts the available flexible spot LNG supply.

As a share of imports, Europe is the least secure, according to data from the Energy Institute cited by Reuters columnist Gavin Maguire.

Europe has traded dependence on Russian gas before 2022 with dependence on American LNG after the Ukraine war. It has raised the share of U.S. LNG imports in its gas supply, but now a large part of the more flexible American supply is going to the highest bidder—Asia.

In view of the already massive disruption to global LNG supply, “both Asian and European markets would need to draw more heavily on existing storage and would increase the need for restocking over the summer,” Massimo Di Odoardo, Vice President, Gas and LNG Research at Wood Mackenzie, said earlier this month.

“This would tighten market conditions well beyond the eventual resumption of trade through the Strait.”

Energy Dominance Doesn’t Shield America from Spiking Fuel Prices

In terms of reliance on foreign supply, the United States appears the least vulnerable as its domestic oil and gas production would, in theory, cover 108% of energy needs, per the data from the Energy Institute.

But while the U.S. is a net petroleum exporter, it still needs to import heavier crude grades because refineries cannot run only on the lighter crudes from the domestic shale fields. Crude imports account for about three-quarters of U.S. total gross petroleum imports, according to data from the Energy Information Administration (EIA).

Nearly 70% of all U.S. refining capacity runs most efficiently with heavier crude. That is why 90% of crude oil imports into the United States are heavier than U.S.-produced shale crude, the American Fuel & Petrochemical Manufacturers (AFPM) trade association says.

Even if the U.S. is the world’s biggest crude oil producer, its refining markets and fuel prices are not an island and depend on the global price of crude, which has surged since the war in Iran started.

As a result, gasoline and diesel prices are soaring.

On Wednesday alone, Americans were set to spend about $350 million more on gasoline than they did on February 28, the day the U.S and Israel began the offensive in Iran. Since February 28, Americans have spent $3.7 billion more on gasoline, according to live GasBuddy gas price data, said Patrick De Haan, head of petroleum analysis at GasBuddy.

GasBuddy also estimates that the jump in diesel prices is record-setting—this week saw the largest 2-, 3-, and 4-week surges in diesel prices ever.

“Prices aren’t at record highs - but the speed of this surge is,” de Haan noted, as the massive supply shock from the Middle East war is ripping through every major market.

By Tsvetana Paraskova for Oilprice.com

 

U.S. Bets on Natural Gas to Power 10 GW AI Buildout in Ohio

Amid the Iranian war and oil price crisis, the Department of Energy, alongside the Department of Commerce, has unveiled a public-private partnership with SoftBank and AEP Ohio that centers on one thing the AI boom desperately needs but rarely talks about plainly—power. Not theoretical power. Not intermittent power. Real, dispatchable, grid-ready megawatts, mostly from natural gas.

At the core of the plan, revealed in a Friday press release, is a 10-gigawatt data center campus at the Portsmouth Site in southern Ohio, backed by an equally massive 10 GW of new generation. Of that, a staggering 9.2 GW will come from natural gas.

The $33.3 billion in Japanese-backed funding tied to the gas buildout tells the story of just how serious this is. This isn’t a pilot project or a feel-good clean energy press release. This is baseload muscle being bolted onto the grid to support hyperscale computing.


And the grid, frankly, needs the help. As part of the deal, SB Energy is committing $4.2 billion to transmission upgrades with AEP Ohio to expand capacity. And—critically—doing it without passing costs onto ratepayers. That last point reflects a growing reality: the US power grid wasn’t built for AI workloads that can rival small countries as far as electricity demand.

Ten gigawatts is the equivalent of multiple nuclear plants or a sizable chunk of a regional grid. And nearly all of it is gas-fired, signaling where reliability concerns are landing in real-world investment decisions.

There’s also a strategic layer. Repurposing DOE land tied to legacy nuclear work into a hub for AI, quantum computing, and advanced research is about control of infrastructure, supply chains, and technological leadership.

Construction is expected to kick off this year.

By Julianne Geiger for Oilprice.com

TotalEnergies Launches France’s First Advanced Plastic Recycling Plant

TotalEnergies has commissioned France’s first advanced plastics recycling facility at its Grandpuits site near Paris, with a processing capacity of 15,000 tons per year. The plant utilizes pyrolysis technology provided by Plastic Energy to convert hard-to-recycle household plastic waste into synthetic oil.

This synthetic oil is then reintegrated into the petrochemical value chain as a feedstock, enabling the production of recycled plastics that match virgin-grade quality, including for high-spec applications such as food packaging and medical use.

The startup represents a critical milestone in TotalEnergies’ broader transformation of its Grandpuits refinery into a “zero-crude” platform—an industrial hub designed to operate without traditional crude oil refining. Instead, the site is being repositioned around circular economy initiatives, biofuels, and low-carbon solutions.

By deploying advanced recycling, TotalEnergies is targeting waste streams that cannot be processed through conventional mechanical recycling, addressing a major bottleneck in plastic waste management.

The facility relies on pyrolysis, a thermochemical process that breaks down plastic waste at high temperatures in an oxygen-free environment. This method produces a liquid hydrocarbon output—often referred to as “pyrolysis oil”—which can substitute for fossil-derived feedstocks in petrochemical production.

To ensure feedstock supply, TotalEnergies signed agreements in 2023 with French recycling and waste management players Citeo and Paprec. These partnerships secure long-term access to post-consumer plastic waste streams that would otherwise be landfilled or incinerated.

Plastic Energy, the technology provider, is a key collaborator in scaling this advanced recycling pathway across Europe.

Advanced recycling—particularly pyrolysis—is gaining traction across the global petrochemical and energy sectors as companies seek to improve circularity and reduce reliance on virgin fossil inputs. Major oil and gas firms have increasingly invested in chemical recycling technologies to meet tightening regulatory pressures in Europe and growing demand for recycled-content plastics.

France, like much of the EU, faces stringent recycling targets and mounting pressure to reduce landfill use. The Grandpuits project positions TotalEnergies at the forefront of this transition domestically, while aligning with broader EU circular economy policies.

The development also reflects a wider trend among refiners repurposing legacy assets into low-carbon and circular platforms, as traditional fuel demand growth slows and sustainability mandates intensify.

The success of the Grandpuits facility could serve as a template for scaling advanced recycling across TotalEnergies’ global portfolio. While still nascent, chemical recycling technologies are expected to play a growing role in closing the plastics loop—particularly for complex and contaminated waste streams.

As regulatory frameworks evolve and demand for recycled plastics rises, early investments in advanced recycling infrastructure could offer both compliance advantages and new revenue streams for integrated energy companies.

By Charles Kennedy for Oilprice.com