Can We Stop the Spread? Energy, AI, and Supply Chains in a World on Fire

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“Every form of addiction is bad, no matter whether the narcotic be alcohol or morphine or idealism.” – Carl Jung

I have a sneaking suspicion that many will read the above quote as an allusion to net-zero environmental idealism – I would have read it that way myself before. But reading it only in this way is to be guilty of the same addiction. Righteousness comes in many versions, and we often have our own version of the vice, so to avoid falling into the same trap, it is very important to start with checking our own idealistic biases.

In her op-ed, Pilita Clark, an FT climate columnist, accuses the “anti net-zero zealots” of ideologically irrational behaviour that ignores a scientific conclusion that net zero is the only way to stop global warming and halt the worsening of the awful heat waves and forest fires. It is a wonderful example of an idealistically driven argument against idealism, and it is the perfect embodiment of the brilliant Jung quote.

Ideals are not in themselves bad. On the contrary, I think we need them to inform our objectives, but that cannot be confused with the principles that implementation requires. Because implementation is never ideal, and because it has to be delivered in imperfect nature by imperfect humans with imperfect information, using imperfect tools, and imperfectly cooperating.

But let’s get back to the world that is literally on fire, with its energy and industrial building blocks squarely in the middle.

Overheating conflicts, between states, between social groups, and between political and economic forces, are all happening at once and amplifying the intensity and volatility of the state of affairs around global energy and industrial value chains.

The Russia-Ukraine war keeps escalating, and the week’s dominant narrative zoomed in on Ukraine’s intensified attacks on Russia’s energy and economic infrastructure. Kyiv has hit 11 of Russia’s 34 large refineries this month alone; regions from Orenburg to Lipetsk are rationing fuel by licence plate, the tourism centre of Sochi is asking residents not to drive, and Russia has begun importing gasoline from India for the first time. True as that is, I see the zooming creating a blind spot: Russia’s attacks are also increasing in response. Russia launched more than 70 attacks on Ukraine’s Black Sea port infrastructure and 62 strikes on vessels in July and early August, halting Novorossiysk’s grain terminals and collapsing Ukraine’s grain exports by 75% year on year in the first two weeks of August, with famine warnings for import-dependent countries in Africa and the Middle East. Ukraine has reportedly proposed a Black Sea ceasefire, which Russia rejected, before the two exchanged more aggressive language. Even Washington got entangled in the spiral: Vice President JD Vance asked Kyiv to stop striking tankers at the Caspian Pipeline Consortium terminal to protect Kazakh flows and US majors’ interests. When you look at both sides, it becomes very clear that the escalation spiral can keep winding for a long time, impacting global energy security and the economy in more and wider ways.

The US-Iran war and its Hormuz closure is no longer a temporary disruption, but a spreading regional conflict. The global narrative is now updating and deciding on how to frame the realistic situation that looks likely to protract through the rest of the year, as Reuters is asking whether there are enough strategic oil reserves to last for six more months: Aramco’s chief puts cumulative lost supply at 2.6 billion barrels, and the IEA’s government-held stocks have dropped below 1 billion barrels, roughly 180 days of cover at the current 5 million barrel per day gap. The flow numbers are contested ground: US Energy Secretary Chris Wright claims almost 9 mmbd are leaving Hormuz, while tanker trackers see about half that, and the market is left to decide whose count, and whose narrative, to price.

Beyond oil, Europe and Asia are especially vulnerable to gas supply shortages, with EU storage just 59% full, the lowest seasonal level since records began in 2009, and the rest of the world is caught in a supply chain scramble from engine oil, where base oil prices have nearly trebled to $4,000 a tonne, to aluminium, with LME stocks at their lowest since 1990.

The frame is tricky, because it has to balance immediate shortages and skyrocketing prices, with the extra profits they are visibly bringing to the unloved fossil fuel sector; the top three US refiners earned a combined $12.6 billion in the second quarter and returned $6.3 billion to shareholders. And there is a very real set of longer-term impacts on fuel, technology, and policy choices to reduce dependencies already visible: US hybrid sales rose almost 20% in July, US clean energy investment reached $75 billion in Q2, its second-highest quarter on record, and even Russia’s Deputy PM Novak was quoted saying recently that the current crisis will likely accelerate the world’s transition toward renewable energy.

An AI-centred conflict is playing out in the economy and energy planes in parallel. AI has played the role of a financially inflated tide lifting the boats of the otherwise troubled (and also financially inflated) global economy; Anthropic’s investors are now betting on a $2 trillion valuation in a record October IPO. The tide’s continued rise requires more energy than the current system can reliably and affordably deliver at the speed of tech. It has also been painted as the new joiner to the unloved fossil fuels party, attracting increasing scrutiny.

A new study painted that into a nefarious trifecta equation, where (oil and gas production) + (AI) = (more emissions and faster climate change). It estimates AI-enabled fossil fuel gains could add emissions equal to 1–5% of the energy sector’s 2024 total, 3x to 13x what data centres themselves emit. Data centres are no longer just getting criticised for their own environmental footprint but also for their promise of improving production economics and efficiency in the fossil fuels sector. A large part of the solution for both lies upstream in how they proactively manage reputation risks and communication. At least 75 US data centre projects worth some $130 billion faced local opposition in the first quarter, lenders now fold community sentiment into credit risk, Texas went from welcoming data centres to pausing them in three months, and Willie Nelson has moved seamlessly from fighting Keystone XL to fighting data centres.

Meanwhile, the environmental reality of severe heat waves is adding fuel to the fire of energy security and electricity reliability, and the optics of it are pressing harder on policymakers looking to respond. Romania fully shut its sole nuclear plant for the first time since 2003 as the Danube dried up, Hungary is sinking barges to keep cooling water at Paks nuclear plant, jellyfish took three French reactors offline, and the Rhine at Kaub has fallen a third below its previous record low, forcing German states to suspend the Sunday truck ban.

Other notable themes of the week:

• Minerals: the US is pursuing an active coalition-building and China-diversification strategy, from a $400 million Pentagon loan to an Australian scandium miner to a US-Japan plan for the world’s deepest undersea rare earth mine at Minamitorishima.

• US Ambassador to the EU Andrew Puzder is back in the ring, calling CBAM a protectionist tariff (he’s not wrong, it is a form of industrial protection) and evidence of a double standard; however, publicly this plays a bit more like the US (again) meddling in European policy and hardening the stance.

• Massive new oil spills are adding high ecological costs to the growing wars toll. The oil slick from a grounded shadow-fleet tanker off Oman now covering more than 2,000 square kilometres, and the IOPC Funds refusing clean-up compensation because the incident is treated as an “act of war”; Iran is battling a separate spill off Qeshm Island, a breeding ground for endangered sea turtles, with 65 confirmed ship-damage incidents across the region since March.

• New infrastructure and investment decisions to reduce the role of Hormuz in global energy security: ADNOC has sold at least 94 million barrels on the spot market since June and is exploring an LNG plant outside the strait, Türkiye is pitching Ceyhan as a 3.5 million barrel per day alternative hub, and the new Turkey-Saudi-Pakistan “Mecca Defense Alliance” may widen to Egypt

A dose of optimism.

When you read this week’s global context in one sitting, it may seem like a multi-layered doomsday knot. But I remain an optimist.

While there are undoubtedly many complex forces behind the world's conflicts, all of them are ultimately a product of just three things: human decisions, human narratives, and nature. We have agency in two of the three, and enough intelligence to understand the third better, if we put our minds to it. The three are interlinked and not mutually exclusive, and with their help, we can work to untie the knot and put the fires out.

Conflicts are as unavoidable, as they are necessary to move forward. Resolving them more effectively requires greater awareness of our own tendencies blindsiding us, and regular check-ups for selective idealism and forceful righteousness - whatever the ideology - could be a good start.

The Select Stories We Reviewed

Russia

• Russia Says 13 Killed in Ukraine Attack on Tatarstan Energy Hub (Bloomberg, August 10)

• Russia’s Black Sea Port of Novorossiysk on Fire, NASA Data Show (Bloomberg, August 12)

• Ukraine Strikes Grain Terminals at Russia’s Key Black Sea Port (Bloomberg, August 12)

• Russia Turns to India for Gasoline as Ukraine Pummels Refineries (Bloomberg, August 12)

• JD Vance asked Ukraine to halt strikes on tankers using Russian port (Financial Times, August 12)

• Second Round: Russia is introducing limits on the sale of fuel again (Itek, August 12)

• Ukraine's farmers despair as Russia's Black Sea blockade traps their harvest (Reuters, August 13)

• Russian ghost fleet tankers use ‘Mad Max’ nets to fend off Ukraine’s drones (Financial Times, August 13)

• UK extends license allowing transactions with Lukoil companies in Bulgaria (Anadolu Agency, August 13)

• Russian Regions Report New Fuel Crunch As Kyiv Hits Refineries (Bloomberg, August 14)

• Russia dismisses idea of Black Sea ceasefire (Reuters, August 14)

• Russian share of India's oil imports surges to record high in July (Reuters, August 14)

• Number of Linde industrial gas plants in Russia transferred to Kuibyshevazot (Interfax, August 16)

Iran and Hormuz

• Pakistan Says Deal Is Close Even as Iran, US Harden Stances (Bloomberg, August 11)

• UAE Shuttles Oil Exports From Iraq Through the Strait of Hormuz (Bloomberg, August 12)

• Trump Claims Hormuz Control as US, Iran Harden Their Positions (Bloomberg, August 12)

• ADNOC unbound: War, OPEC exit launch Emirates oil giant on quest for growth (Reuters, August 13)

• Are global oil stocks big enough to weather another six months of US-Iran war? (Reuters, August 13)

• The US says more oil is leaving the Middle East, but is it really? (Reuters, August 13)

• Iran defiant on strait as Trump tells Americans to accept high gasoline prices (Reuters, August 14)

• Hormuz traffic slows further after US threatens more economic pressure on Iran (Reuters, August 14)

• Tankers Are Going Dark for Longer to Get Oil Out of Middle East (Bloomberg, August 14)

• US to Roll Out ‘Economic Isolation’ Plan for Iran Next Week (Bloomberg, August 14)

• UAE says Iran attacked ADNOC vessel in Hormuz, urges waterway's reopening (Reuters, August 15)

• Trump wants more economic pressure on Iran. What are his options? (Reuters, August 16)

Energy Security

• US fuel exports to Cuba spur chaotic black market (Reuters, August 11)

• Global Gas Turbine Orders Soar to Record Quarter, JPMorgan Says (Bloomberg, August 11)

• Diesel desperation is mounting globally (Axios, August 12)

• Oil Supply Crunch Worsens Despite War’s Demand Hit, IEA Says (Bloomberg, August 12)

• Exclusive: Startup gets cash for "massive" grid solution (Axios, August 13)

• Why Europe Is Struggling to Build Its Gas Stocks Before Winter (Bloomberg, August 13)

• India cuts windfall tax on exports of petrol, diesel, aviation fuel (Reuters, August 14)

Heat Wave

• German states suspend Sunday truck ban as low Rhine levels disrupt shipping (Financial Times, August 11)

• Jellyfish-hit French nuclear plant shuts down three reactors (Reuters, August 11)

• Farmers move to night shift to beat the heat (Financial Times, August 12)

• Low Danube Forces Full Shutdown of Romania’s Sole Nuclear Plant (Bloomberg, August 13)

• Hungary to sink two barges near nuclear plant to ensure cooling (Reuters, August 14)

• More blazes and fewer firefighters: UK brigades under pressure (Financial Times, August 14)

• European companies count the costs and gains of extreme heat (Financial Times, August 16)

AI and Data Centres

• Singapore shrugs off Iran war as AI boom buoys growth (Financial Times, August 11)

• Anthropic investors bet on $2tn valuation in record IPO (Financial Times, August 13)

• Data center backlash echoes fossil-fuel politics (Axios, August 14)

• ‘Enablers’ are the AI sweet spot for investors (Financial Times, August 14)

• Malaysia profits from data centre boom (Financial Times, August 16)

Emissions and Climate

• Huge oil slick hitting Oman's shoreline as agencies warn of disaster (Reuters, August 12)

• Iran Battles Oil Spill Near Key Persian Gulf Island of Qeshm (Bloomberg, August 12)

• Experts Race to Salvage Leaking Oil Tanker Grounded Off Oman (Bloomberg, August 13)

• Alarm bells are ringing for investors on climate (Financial Times, August 13)

Markets

• Top US refiners see profits soar, step up investor rewards (Reuters, August 12)

• Oil settles down 2% on weak demand outlook, hefty US crude build (Reuters, August 13)

• For the Oil Market, the Strait of Hormuz Isn’t Closed (Bloomberg, August 13)

• Oil Holds Drop as Hormuz Deal Elusive While Ship Attacks Persist (Bloomberg, August 14)

New Map

• Turkey Says Mecca Defense Pact Could Be Widened to Include Egypt (Bloomberg, August 9)

• Adnoc Gas Exploring New LNG Export Plant to Avoid Hormuz Strait (Bloomberg, August 10)

• Europe’s carbon mechanism is a tariff by another name (Financial Times, August 12)

• Türkiye's Ceyhan could become alternative oil trade route amid Hormuz disruptions (Anadolu Agency, August 16)

Public Opinion and Reputation

• Lenders scrutinize US data center financing as community opposition builds (Reuters, August 10)

• AI could help unlock more oil — and emissions (Axios, August 11)

• How to stop global warming (Financial Times, August 12)

• Exclusive: Hyperscalers might regret embracing natural gas if new forecast proves correct | TechCrunch (TechCrunch, August 14)

Minerals

• US backs Australian rare earth miner to cut out China (Financial Times, August 10)

• US, Japan Plan World's Deepest Undersea Mine to Challenge China (Bloomberg, August 12)

• CATL Mine’s Unclear Future Clouds China’s Nascent Lithium Market (Bloomberg, August 14)

Nuclear

• X-Energy gets additional up to $1 billion public US funding for Texas nuclear project (Reuters, August 13)

• India opens nuclear sector to proven foreign technology (Reuters, August 14)

Supply Chains

• Aluminum Hits Seven-Week High as Hormuz Impasse Threatens Supply (Bloomberg, August 11)

• World’s largest carmakers seek to avert motor oil crisis (Financial Times, August 16)

Transition

• Asian carmakers cash in as high petrol prices lift US demand for hybrids (Financial Times, August 9)

• Clean Investment Monitor: US Q2 2026 Update (Clean Investment Monitor, August 16)

Africa, China, Capital, Industry, Upstream Oil & Gas

• Drone Hits Tank at Libyan Refinery, Threatening Oil Facilities (Bloomberg, August 11)

• South Africa’s Eskom targets data centre ‘gold rush’ for its power surplus (Financial Times, August 12)

• Billionaire Peter Thiel buys 1% stake in Argentine Vaca Muerta oil firm, filing shows (Reuters, August 16)

• Taiwan hits out at China over naval drill with Indonesia (Financial Times, August 12)

• Rio Tinto Aluminum Smelter Gets $1.8 Billion Australian Bailout (Bloomberg, August 12)

• Nigeria Offers Deepwater-Oil Tax Breaks to Lure $50 Billion (Bloomberg, August 11)

• ONGC gets U.S. licence to resume full Venezuela operations, eyes operatorship (The Hindu, August 16)

If you are looking to go deeper and determine your positioning, engagement, or develop communication in any of these moving topics, let's chat. Book a free call below, or send us an email.

SOURCES

Anadolu Agency, Axios, Bloomberg, Clean Investment Monitor, Financial Times, Interfax, Itek.ru, Reuters, TechCrunch, The Hindu

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