Energy Policy

The war in the Middle East and the on-again, off-again closure of the Strait of Hormuz have dominated news cycles for months. The oft-predicted economic apocalypse hasn’t materialized. Yet.

As one door closes, another opens. For Russia, which lost European markets and relations, the doors of old Soviet allies and fellow pariahs open, this time in Pyongyang. Communist North Korea was Joseph Stalin’s creation, installed under Soviet occupation and formally established in 1948, then pulled back from collapse two years later by Mao Zedong’s intervention in the Korean War—arguably two of the worst dictators of the 20th century. Its actual grandfather is Kim Il-Sung, founder of the ruling dynasty and grandfather of the current ruler, Kim Jong Un.

Russia faces an acute energy and fuel crisis following months of Ukrainian attacks on its refineries and other energy infrastructure. This has created long lines and economic slowdowns in Russia, forcing some regions to ration fuel.

Undersea cables and pipelines are a part of critical infrastructure in the modern world under an increasing threat. More than 95% of international internet traffic travels through undersea fiber-optic cables, connecting virtually every major digital service. Companies including Google, Meta, Microsoft, Amazon, and many telecommunications providers invest directly in subsea cables to support demand that affects our daily lives.

The price of copper surged over 40% in 2025 and continued to hit record highs in 2026, reflecting strong demand and highlighting the impact of supply constraints. Essential since the Bronze Age, copper has remained crucial to the global economy. Copper’s desirability and ubiquity stems from its thermal and electrical conductivity, malleability, and corrosion resistance, making it difficult to replace across a wide range of industries.

On the first of this month, Ukrainian drones struck three oil refineries in Russia’s Bashkortostan region near the city of Ufa, around 1,600 kilometers from the border. A day later, Rosneft’s Saratov refinery was hit, a plant that processed 5.8 million tons of oil in 2024. These two incidents are part of a long list of damaging attacks on energy infrastructure by Ukraine this summer. These strikes are landing even as the Kremlin insists there are “no immediate prospects for resuming ​the negotiation process” and resists Ukraine’s calls for a ceasefire while maintaining that Russia remains open to negotiations in principle.

Russia—the petrostate that spent a decade trying to weaponize natural gas against Europe—is now rationing fuel at home as shortages spread across the country. The Crimea has declared a state of emergency, and other occupied Ukrainian territories are struggling to secure adequate supplies as civilians continue to flee the deteriorating conditions. Ukraine’s sustained drone and missile campaign against Russian refineries, depots, and logistics is inflicting real costs on Moscow's capacity to sustain both its war machine and domestic stability. The Schwerpunkt—the breaking point—has not yet been reached. However, the balance of power is shifting toward Kyiv.

As the fighting in the Persian Gulf expands, competition between major region-adjacent powers, including Turkey and Pakistan, is plain to see. While Iran is attacking the U.S., Israel, Kuwait, the UAE, and other Gulf states, the Sunni bloc led by Turkey and Pakistan, with Saudi Arabia and Qatar as its members, is bobbing and weaving. The conflict may weaken the I2U2 (Israel-India-UAE- U.S.) and undermine American influence in the Gulf if Iran is not defeated decisively.

The war with Iran and the recurrent closures of the Strait of Hormuz have rattled financial markets across the globe, but the greatest immediate costs are being borne by the Arab Gulf states, long safe havens of domestic and international investors. Missile strikes and drone attacks have damaged critical facilities, disrupted aviation, and undermined the aura of stability that had long distinguished these states in the often-turbulent Middle East. According to the April 2026 IMFRegional Economic Outlook Update, flight departures fell by roughly one-third in Abu Dhabi, about two-thirds in Dubai, and approximately three-quarters in Doha during the first months of the conflict, while some Gulf airports experienced complete suspensions. Infrastructure of all types was damaged, and the myth of safety was shattered.

This past Saturday, July 4^th, saw two major events on the world stage. In America, jubilant crowds celebrated 250 years of independence, replete with fireworks, air shows, sizzling heat, and congratulations from around the globe, including the EU, UK, Germany, Italy, Ukraine, Poland, Russia, India, Saudi Arabia, the UAE, Israel, and many others.

During the opening months of the Second World War, things moved slowly first in the period that became known as the Phony War, or Sitzkrieg in German. Following the fall of Poland in September 1939, and before Germany invaded Denmark and Norway in April 1940, the absence of sustained military operations created the illusion of normalcy. The conflict had not yet escalated, though the belligerents were planning, repositioning, replenishing, and preparing for the next phase. Despite the belligerents’ massive wartime potential, populations and policymakers were lulled into a false sense of control.

The United States has struggled with the disposal of spent nuclear fuel for decades. As AI data centers are popping up like mushrooms after a summer shower, the country’s electricity supply faces a massive projected shortage, and scaling up nuclear power production is a must. The lack of a nationwide system for reprocessing or disposing of spent nuclear fuel is a burden that slows the industry and hinders U.S. industrial development. It is a drag on America’s GDP growth.

As AI drives rising energy demand, the Trump Administration is exploring an unconventional energy source: surplus nuclear-weapons-grade plutonium from the Cold War. In May 2026, the Department of Energy, under its Surplus Plutonium Utilization Program, selected five companies—Oklo, Flibe Energy, Exodys Energy, SHINE Technologies, and Standard Nuclear— to examine whether the excess plutonium can be converted into fuel for advanced nuclear reactors. The initiative provides an opportunity for the country to turn what has long been regarded as a costly disposal challenge into a source of domestic energy. We know the physics works. The question is whether it can be made economically viable.

The announcement that Washington and Tehran have agreed to end hostilities and restore commercial access to the Strait of Hormuz has had a massive impact on markets. Crude futures dropped sharply.

Since June 7, Iran and its proxy, the Houthi rebels (with their rallying cry, “God is great, death to America, death to Israel, a curse upon the Jews, victory to Islam”), have launched more than 30 ballistic missiles at Israel, prompting the Israelis to retaliate with airstrikes, and setting the stage for renewed hostilities and escalating instability in the region. Iran’s Parliamentary Speaker, Mohammad Baqer Ghalibaf, said Iran’s response was tied to the U.S. naval blockade and alleged Israeli counterattacks against Hezbollah in Lebanon, and threatened further action against U.S. and Israeli targets. While the attacks have escalated tensions in the Middle East and exposed the fragility of diplomatic efforts, they also highlight the growing economic constraints shaping Iran’s position. Some analysts say that Iran wants a deal to lift the U.S. blockade and allow the export of oil already loaded on tankers stuck in the Gulf.

Warfare in the Persian Gulf is hitting markets well beyond oil and gas. Disruptions near the southern Iranian coastal city of Bandar Abbas and the near-blockade of the Strait of Hormuz — through which roughly one-third of globally traded fertilizer moves — are forcing buyers to rethink sourcing strategies that had been established for decades. Fertilizer prices track the cost of natural gas, one of their principal production inputs, meaning energy shocks ripple directly into the agricultural markets

Ukraine’s post-war economic story will not initially be written by startups or fintech. It will be written in fields, furnaces, mines, pipelines, and ports (and drone production).

As the world watches the next act in the U.S.-Iran drama with bated breath, the headlines write themselves: the worst oil disruption in history, a fifth of global supply at risk, and Brent crude close to $110. The International Energy Agency has warned that the ongoing Iran War represents an unprecedented supply shock. Yet before declaring this the ultimate energy crisis, it is worth asking a simple question: compared to what?

Canada’s first-ever Investment Summit is scheduled for mid-September. The aim is to attract global capital for “nation-building” projects across energy, infrastructure, and critical minerals, demonstrating Ottawa’s efforts to expand the country’s role as a global energy supplier.

Russian missiles continue pounding Ukraine’s energy infrastructure despite President Vladimir Putin’s unilateral declaration of a ceasefire on May 9^th. Earlier, Russian Deputy ‌Prime Minister Alexander Novak announced the suspension of Kazakh crude oil supplies via the Druzhba pipeline to Germany starting May 1^st. This pipeline, which became operational in the 1960s, runs from Tatarstan, Russia, and branches through Belarus and Ukraine to supply Germany and Poland via the northern branch, and Slovakia and Hungary via the southern branch. While Novak claimed the move to stop the flow of oil from Kazakhstan contracted by Germany was due to “technical possibilities,” the PCK Schwedt refinery near Berlin, which supplies most of Berlin’s fuel and relies on Kazakhstan for 17% of its crude supplies, will be hit hardest. In seeking to wean themselves from Russian oil, the Germans made an error—they continued to depend on Russian infrastructure for delivery. Germany was also addicted to the Russian gas way past the 2014 Russian invasion of Ukraine, low cost and ease of access being too tempting to give up despite geopolitical dependence.

The world is fighting a two-front energy war. One front runs through the Strait of Hormuz, where Iran and the United States are locked in a standoff. My old acquaintance, International Energy Agency Executive Director Fatih Birol, called this the worst energy shock in history, more severe than the 1970s oil crisis and the Ukraine war combined. The second front runs through the heart of Europe, where Ukrainian drones are systematically dismantling Russia’s oil export infrastructure while Moscow, stung and furious, ispunishing its neighbor and ally, Kazakhstan, and its former energy customer, Germany, for it.

Investors in Saudi Arabia, Qatar, and the United Arab Emirates who accumulated trillions from decades of oil sales have long been deploying sovereign wealth funds into Western assets. Their money has gone into technology, sports, infrastructure, real estate, and entertainment. That strategy was built on a simple premise: petrodollar revenues generated at home could be channeled abroad into stable, high-return sectors.

Oil prices collapsed from $119.54 in the Asian intra-day trade on March 9^th to $89.88 on April 17^th, after Iran announced that, following a ceasefire in Lebanon, it would keep the Strait of Hormuz open for the duration of the ceasefire. While no one knows exactly what will happen next as far as the conflict goes, it is safe to say that oil prices will continue to be on a roller coaster ride in response to developments.While from the President’s point of view, his Administration may be bobbing and weaving as it fights a determined, mendacious, and fanatical Islamic Revolutionary Guard Corps, to many observers, the dance looks more like zigzagging between fear of the economic and political backlash from rising energy prices and the need to terminate Tehran’s nuclear ambitions once and for all.

On April 4^th, President Donald Trump posted on Truth Social: “Remember when I gave Iran ten days to make a deal or open up the Hormuz Strait. Time is running out…” Markets have been recoiling amid instability in the Middle East, and it does not appear that jittery investors will experience any relief in the near term. However, this is more than a short-term shock reaction. It signals a deeper shift.

In the wake of American and Israeli strikes against Iran on February 28^th, Tehran reacted swiftly, attacking energy infrastructure, water desalination plants, and other soft targets across the Middle East as well as moving to close the Strait of Hormuz. Closure of the vital Strait has long been foreseen by security experts, including this author, who warned about the Iranian regime’s intentions in a 2007 Congressional testimony, but it still shocked markets. Crude oil prices jumped from approximately $70 dollars a barrel to just over $110 a barrel as the crisis entered its second month.