Via Reuters, the International Energy Agency (IEA) cut its forecasts for global oil supply and demand growth, with demand expected to fall by 80,000 barrels per day in 2026, from a 640,000 barrels-per-day rise in March, and supply expected to decline by 1.5 million barrels per day. The agency previously predicted supply growth ​of 1.1 million barrels per day last month and 2.5 million barrels per day at the start of the year. The IEA’s forecasts imply that supply will exceed demand by 410,000 barrels per day in 2026, in contrast to a 2.46 million barrels per day surplus projected in last month’s report. The IEA’s base case expects regular deliveries of oil and gas from the Middle East to resume by mid-year at below pre-conflict levels. Some other forecasts see ‌the conflict with Iran leading to a supply deficit of 750,000 barrels per day on average this year.

According to the New York Times, the central issue of a peace deal is Iran’s nuclear enrichment program. U.S. negotiators over the weekend proposed a 20-year suspension of all nuclear activity, while Iran floated a five-year suspension, which was rejected by the United States. In contrast, the Obama administration’s agreement with Iran in 2015 allowed Iran to gradually enrich more uranium over time until 2030.

As the Wall Street Journal reports, Saudi Arabia is urging the United States to end its blockade, as it fears that the U.S. blockade could lead to attacks on Red Sea oil assets by the Houthis, a militant group in Yemen backed by Iran. Saudi Arabia warned that Iran might retaliate by closing the Bab al-Mandeb Strait — a Red Sea chokepoint crucial for the kingdom’s remaining oil exports via pipelines to the Red Sea. Saudi Arabia has been able to get its oil exports back to their prewar level of around seven million barrels a day by using the East-West pipeline. The Bab al-Mandeb Strait is a narrow passage between Yemen and the Horn of Africa that connects the Red Sea with the Indian Ocean. The strait leads to the Suez Canal and provides transit for ships sailing between Asia and Europe. Before the war in Gaza, 9.3 million barrels of oil and other petroleum products passed through Bab al-Mandeb, which was cut in half after the Houthis began launching attacks on ships around the gateway.

According to Reuters, the International Monetary Fund, World Bank, and IEA urged countries to avoid hoarding energy supplies and imposing export controls that could worsen the tight oil supply situation. IEA chief Fatih Birol indicated that several unnamed countries were holding onto stocks and imposing export restrictions. He appealed to all countries to allow energy stocks to flow into markets. According to Birol, the conflict had damaged more than 80 oil and gas facilities across the Middle East, including refineries, terminals, upstream production, and pipelines. The IEA had ⁠already called for the release of ​400 million barrels of oil from its reserves, which is 20% of the IEA’s reserves, and was prepared to take further action ​if additional releases were deemed necessary. Birol claims it could take up to two years to restore Middle Eastern output to its prewar level.

Analysis

With the U.S. instituting a new blockade and the dispute over Iran’s nuclear enrichment at an impasse, energy supply disruptions will continue for at least the immediate future. President Trump told Fox Business host Maria Bartiromo that he expects gasoline prices to remain elevated through Election Day in November. Energy Secretary Chris Wright told an interviewer at the Semafor World Economy Forum that expecting prices to return to sub-$3.00/gallon levels is “an aggressive scenario” amid the U.S. blockade.

However, as Birol warned, it’s important that countries don’t use high prices and less supply as an opportunity to institute export barriers. As we explained regarding U.S. oil exports, “U.S. oil reserves are not a fixed pie to be divided among different constituencies, but a deep pool that will be increasingly drawn from as demand and, subsequently, prices rise. If the consumer base for American oil expands from domestic consumers and businesses to the entire world, that incentivizes American companies to invest greater resources in extraction, creating economies of scale that allow producers to get more out of each oil well.”

For inquiries, please contact wrampe@ierdc.org.

The post The Ceasefire Continues Amid the U.S. Blockade of Iranian Ports appeared first on IER.

Links:

• “Enjoy the current pump figures. With the so-called ‘blockade’, Soon you’ll be nostalgic for $4–$5 gas.”
• The illogicality of charging tolls for passage through the Strait of Hormuz

The post Currents: An Energy Update Week of April 13, 2026 appeared first on IER.

According to the New York Times, solar power will help address power outages, as the blockade has led to severe shortages of oil, gas, and diesel fuel. It takes over a month for a private car in Cuba to fill up with gas because it has to join a virtual queue, but an official government car, such as a taxi, can fill up once a week. As a result, gas has been selling on the black market.

The blockade has also incapacitated Cuba’s universal health care system, with hospitals canceling surgeries because doctors and nurses cannot commute to work. Clinics are struggling to administer treatments like chemotherapy and dialysis, and refrigerated vaccine stocks could spoil because of power outages. Many ambulances are parked due to insufficient gas. Pharmacies are largely empty, as medicine production has mostly stopped due to the factories running on diesel. Vaccine makers are searching for ingredients because flights that once brought them are canceled due to a lack of jet fuel.

China Is Expected to Do Well with Renewable and EV Exports

According to the Washington Post, China will benefit from the Iran conflict, given its world-beating green-tech sector, which has suffered from overcapacity in recent years. The conflict with Iran has renewed interest in renewable energy and electric vehicles (EVs) due to the rising cost of oil and liquefied natural gas (LNG) resulting from the 10% deficit in global oil supplies and Qatar’s production cut to LNG.

Factories in Asia are curbing production to save energy, and some gas stations are telling drivers they cannot fill up, hoping volumetric limits help mitigate the short-term impacts of the war. Countries across Asia are switching to coal-powered electricity generation. In Japan, coal could offset up to 70% of gas-fired power generation, and the country is also looking toward reviving nuclear power. Taiwan may restart two coal-power units. Via Semafor, to be less dependent on oil and gas in the future, the Philippines plans to install 100 gigawatts of solar power in the next two years, and Germany is planning to spend billions toward expanding wind power and promoting EV sales.

Thus, the Iran war may help China further expand its renewable and EV export sales, despite doing well even before the conflict began. As reported by The Wire China, African nations imported 18.8 gigawatts of solar panels from China in 2025 — 48% more than in 2024. The continent is a huge market for China’s solar panels since almost 600 million people still lack electricity there. China’s exports of batteries and electric vehicles rose 27% year-on-year in 2025, and sales of wind turbines rose nearly 50%. China’s battery manufacturer CATL’s Hong Kong-listed shares have gained nearly 30% since the war began, while its EV manufacturer BYD’s sales last month were 65% higher than a year ago.

China is the world’s leading exporter of automobiles, having mastered the EV market by producing inexpensive electric vehicles with new models quicker than its competitors. Low energy prices, cheap labor, dominance in the rare earth, mineral, and battery markets, and government subsidies have helped China expand its EV market at home and abroad. China has reached this dominance by burning over half of the world’s coal annually. Electric vehicles and hybrids made up almost half of all new car sales in China, helping the country reduce gasoline consumption and oil imports at a particularly good time, given the Iranian conflict.

Analysis

Lacking oil, Cuba has turned to China for help to supply power to the island through solar panels. The solar panels will provide some relief to institutions that cannot afford electricity interruptions, but will not solve the overall electric grid problem resulting from the blockade. According to an article by Ricardo Torres of Columbia Law School’s Cuba Capacity Building Project, “The recovery of the Cuban electrical system requires more than simply adding megawatts of installed capacity. It requires access to financing, operational discipline, and an incentive framework that values productivity and maintenance. Without these foundations, the grid will remain trapped in a cycle of temporary solutions—more rationing, greater wear and tear, and mounting losses—that erode economic activity and increase social discontent.”

For inquiries, please contact wrampe@ierdc.org.

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The United States now plans to enforce a naval blockade of the Strait of Hormuz. Iran has only allowed a few ships to transit the Strait of Hormuz since the beginning of the ceasefire, noting that safe passage was only through a narrow area where they promised there were no mines. Iran has been unable to locate all of the mines it laid in the waterway and lacks the capability to remove them. Iran used small boats to mine the strait last month, soon after the war began. The mines, plus the threat of Iranian drone and missile attacks, slowed the number of oil tankers and other vessels passing through the strait as insurers refused to cover shipments. Only three supertankers carrying oil passed through the strait on April 11 when talks began. Iran left a path through the strait open, allowing ships that paid a toll of around $1 per barrel of oil to pass through. Because the strait is an international waterway, the passage should be free, prompting President Trump to indicate that the U.S. Navy would “seek and interdict” any vessel that paid the fee to Iran. According to President Trump, the United States will send vessels to the strait to clear the mines, and on April 11, two U.S. guided-missile destroyers transited the strait.

A condition of the two-week ceasefire on Iran was the opening of the Strait of Hormuz for the nearly 400 vessels awaiting safe passage. Iran’s effective blockade of the strait, through which 20% of the world’s oil and liquefied natural gas transit, led to global oil prices rising by more than 50% during the conflict, which began in late February. According to the New York Times, Iranian officials claimed that they would only fully open the strait after a final peace deal, despite U.S. demands to open it to maritime traffic during the ceasefire. The other two key issues are the nearly 900 pounds of highly enriched uranium and Iran’s demand that about $27 billion in frozen revenues held abroad be released. President Trump has demanded that Iran hand over or sell its entire stockpile of near-bomb-grade enriched uranium.

The U.S. blockade of all maritime traffic entering and exiting Iranian ports began at 10 a.m. ET on Monday, April 13. Reuters reports that it ‌would be “enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman,” according to a U.S. Central Command statement. Vessels transiting the Strait of Hormuz to and from non-Iranian ports would not be impeded. According to Miad Maleki, a senior fellow at the Foundation for Defense of Democracies, a U.S. blockade could cost the Iranian economy $13 billion a month.

According to the New York Times, analysts at JPMorgan Chase claim that the last oil tanker to clear the strait on February 28 is expected to reach port next week, “marking the point at which pre-closure barrels are fully exhausted from the global supply chain.” Brent oil, the international benchmark, rose over $102 a barrel, while West Texas Intermediate, the U.S. benchmark, rose above $104. The average U.S. gas price is about $4.125 a gallon. According to President Trump, the price of oil and gasoline may remain high through November’s midterm elections. GasBuddy reports, via Reuters, that the average price for regular gas at U.S. service stations has exceeded $4 per gallon for most of April, up from below $3 per gallon in February.

The Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for world oil demand in the second quarter by 500,000 barrels per day due to the war in Iran. Oil production from OPEC+ members averaged about 35.06 million barrels per day in March — a monthly decline of 7.7 million barrels per day. After being damaged by a strike during the war, Saudi Arabia restored the East-West pipeline to its full pumping capacity of seven million barrels per day.

Analysis

Because no deal was reached in Pakistan between the U.S. and Iranian delegations this past weekend, it seems likely that the U.S.-Iran War will continue to escalate, with the U.S. blockading ships entering and exiting Iranian ports. This blockade will burden China due to its large amount of oil imports from Iran. As IER’s Caleb Jasso explains for RealClearEnergy, “Decades of sanctions have left [Iran] with a very limited customer base for its oil, with the majority of it going to China at heavily discounted prices. For this reason, with the possibility of regime change in Iran, China stands to lose a significant portion of its discounted oil supply, especially when combined with the shift in political direction in Venezuela, another vital source of heavily discounted seaborne imports for the Chinese Communist Party.”

For inquiries, please contact wrampe@ierdc.org.

The post The U.S. and Iran Fail to Reach a Peace Deal appeared first on IER.

The hysteria over rising electricity prices and data center electricity demand has moved across the nation. According to the Wall Street Journal, at least 10 states other than Maine are advancing policies attempting to mitigate the cost and increase in generating capacity needed to accommodate new data centers. Legislators have introduced measures to temporarily ban or restrict data centers in New York, South Carolina, Oklahoma, and other states. In Ohio, some activists are collecting signatures to put a statewide ban on large data centers on the November ballot. Other municipalities and counties, especially small ones in Michigan and Indiana, imposed temporary pauses on data center development, and Denver and Detroit are among the major cities considering bans.

While Virginia is the current leader in data center activity, Texas is expected to surpass it as the top U.S. data center hub, with a projected total of 962 sites across operational, under-construction, and announced projects.

As the Journal reports, in Maine, some data center developments have targeted defunct industrial sites, such as closed mills. One company recently proposed building a $415 million underwater data center off Maine’s coast, powered by tidal energy. According to Data Center Dynamics, DeepGreen Western Passage SPV LLC wants to build a 51-megawatt power project offshore near the town of Eastport, which borders the Atlantic Ocean. The company submitted an application to the Federal Energy Regulatory Commission, requesting a 48-month permit to conduct environmental studies and engineering work in the area. The company would build “universal docking cradles” on the ocean floor, into which it would plug energy-generating turbines and pods containing artificial-intelligence computer infrastructure. The initial deployment would house 170 turbines and 34 data center pods, providing power for the data servers and Maine residents. The project is estimated to cost $415 million, funded by DeepGreen and other backers.

Via the Journal, the Maine House is considering adding exemptions to the bill that would allow two planned data center projects to move forward in Jay and Sanford, in southern Maine. Governor Mills supports an exception for the project planned in Jay, as it is “expected to bring much-needed jobs, economic activity and tax revenue to the region.”

Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez recently proposed legislation to temporarily pause data-center construction in the United States. Both Congress members support climate policies that are the real cause of the high electricity prices troubling blue states. Sanders and Ocasio-Cortez are from states, Vermont and New York, respectively, whose residential electricity prices are among the top 10 highest nationally — higher than those in states with more data centers. Both states are heavily into climate policies that have retired nuclear and coal plants, limited natural gas use, and created superfunds to punish oil and gas producers, while being members of the Regional Greenhouse Gas Initiative and having renewable portfolio standards or clean energy standards. IER’s Blue States, High Rates shows the linkage between a state’s approach to climate and “green energy” and high electricity prices.

Analysis

In blue states, it is easier to blame data centers than to admit that instituting policies that promote intermittent renewable energy, which requires expensive backup power and additional transmission to reach demand centers, raises rates. Data centers are an easy target for blame as prices continue to rise largely due to the addition of transmission projects implemented to bring renewable generation to demand centers. Because natural gas generation is easier to site, it doesn’t need the high level of transmission infrastructure that renewables do. If proponents of slowing or stopping new electrical demand in the United States succeed in linking increased demand to higher prices, it could have severe implications for all kinds of economic expansion in the United States.

However, as we highlight in Have Data Centers Driven Up Electricity Prices?, data centers and increased demand are not causing the high electricity prices. In fact, history shows just the opposite; more electricity sales actually correlate with lower prices, as the grid’s fixed costs are spread over more consumers.

For inquiries, please contact wrampe@ierdc.org.

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Even when the strait was opened for a short period of time, there were conditions for passage. According to Iran’s Foreign Affairs Minister Abbas Araghchi, safe passage over the next two weeks “will be possible via coordination with Iran’s Armed Forces and with due consideration of technical limitations,” which means that individual ship owner and operator companies would need to receive permission from Iran to resume shipping through the strait. According to the Associated Press, the ceasefire plan reportedly also allows Iran and Oman to charge tolls on ships navigating the strait, as it lies within the territorial waters of both countries. Shippers had not previously paid tolls because the strait is considered an international waterway. The New York Times reports that the move could violate international law.

On April 8, four ships were allowed to pass with Iran’s Islamic Revolutionary Guard Corps charging tolls and indicating that it would limit traffic to about a dozen ships a day. According to the Wall Street Journal, Iran is formalizing a tiered approach to fees with ships carrying Iranian oil or goods passing freely, ships from friendly countries paying a toll, and ships from countries aligned with the United States or Israel blocked. Shipping operators say fees would be set around a week in advance and depend on the size of the vessel, with payments ranging to $2 million for a supertanker that can carry around two million barrels of oil, paid in crypto or Chinese renminbi.

Shippers are wary of the logistics for passage and may wait to ensure that the ceasefire holds before committing their vessels. Around 187 ​laden tankers carrying 172 million barrels of oil and refined products were afloat inside the Gulf before the ceasefire, and many more ocean-going ​vessels are waiting to transit. Under normal conditions, it would likely take more than two weeks to clear the backlog.

Negotiations for peace are scheduled to begin on Saturday, April 11, based on one of Iran’s 10-point peace proposals, which President Trump called “a workable basis on which to negotiate.” While it is unclear what the proposal contains, Iran had previously demanded conditions that included guaranteed control over the Strait of Hormuz, acceptance of its nuclear enrichment activities, removal of sanctions, and repatriation of financial losses. On Truth Social, President Trump wrote that there would be “no enrichment of Uranium,” that the United States and Iran would work together to dig up and remove nuclear “Dust,” that potential relief from tariffs and sanctions are on the table, and that many of the “15 points” of the Trump administration’s ceasefire plan have been agreed to. The White House also notes that the original “10-point plan” of Iran referenced in media reports was discarded and replaced with a later plan that is the basis of negotiations.

The price for Brent crude, the global benchmark for oil, dropped below $95 a barrel after hovering around $110 when the ceasefire was announced, but then headed back up towards $100 a barrel when Iran reclosed the strait. The initial drop was one of the largest 12-hour reductions in oil prices in history. The national average price of regular unleaded gas was $4.17 per gallon on the morning of April 9. Patrick De Haan, head of petroleum analysis at Gas Buddy, predicted it could fall below $4 a gallon within one or two weeks if the ceasefire continued. He further commented, before the strait was re-closed, that “gas prices could start reversing nationally in 48 hours or so — by a few cents every day.”

Alternate Route to Strait of Hormuz Needed

The Iran war has clearly pointed out the bottleneck that the Strait of Hormuz can cause when Iran effectively chooses to close it, barricading 20% of global oil and gas supplies without a transit point. Clearly, an alternate route or routes are needed besides the few pipelines that have been built: one by Saudi Arabia — the East-West pipeline, capable of moving seven million barrels per day to the Red Sea — and the other by the United Arab Emirates — a 1.8-million-barrel-per-day pipeline linking onshore oil fields to the Fujairah export terminal in the Gulf of Oman. Even those are not safe from Iranian attacks. An Iranian drone struck the East-West pipeline on April 8, according to the Wall Street Journal. Damage assessments are still being made.

Analysis

While it’s a positive sign that the U.S. and Iran are engaging diplomatically to resolve the conflict and reopen the Strait of Hormuz, the difficulty of both sides reaching a lasting agreement should open eyes around the world about the need for alternative supply chain arrangements.

One proposal — The India-Middle East-Europe Economic Corridor (IMEC) — is a proposed, multi-modal transportation network of pipelines, trains, and roads linking India to Europe via the UAE, Saudi Arabia, Jordan, and Israel. It features an eastern corridor (from India to the Persian Gulf) and a northern corridor (from the Gulf to Europe). It would aid economic growth, trade, and regional connectivity by enhancing efficiency, reducing transit times, and providing a logistical alternative to the Suez Canal.

For inquiries, please contact wrampe@ierdc.org.

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