The global energy market is entering a phase of entrenched disruption as scepticism grows regarding the longevity of recent diplomatic efforts. While a temporary ceasefire remains in place, the physical reality of the Strait of Hormuz closure continues to tighten global crude and jet fuel balances. This has catalysed a historic shift in trade flows, pushing the United States toward becoming a net crude exporter for the first time since World War Two, while Europe accelerates emergency refining plans to avoid a summer aviation crisis.

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Macro and Others

Trade Flow Inversion and Hormuz Scepticism Oil prices remained relatively stable this week, with Brent hovering near 95 dollars as traders weighed the start of peace talks against the reality of a 13 million barrel-per-day supply disruption. The market remains sceptical that free navigation through the Strait of Hormuz will be restored in the near term. This vacuum has pulled U.S. crude exports to a record 5.2 million barrels per day, as European and Asian refiners scramble to replace Middle Eastern volumes. For the first time in over 80 years, the U.S. is on the verge of becoming a net exporter of crude on an annual basis.

Aviation Supply Crunch The European Union is drafting emergency measures to address a looming jet fuel shortage. With 75% of its jet fuel typically sourced from the Middle East, the bloc is preparing a "mapping" of refining capacity to maximize output before the summer travel season. Analysts warn that some airports could face supply issues within three weeks if shipments through the Persian Gulf do not resume, as domestic European refining capacity has steadily declined in recent years.

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Carbon Markets

EU ETS Stability and Reform The European Commission is doubling down on its commitment to the carbon market as a driver for investment. Kurt Vandenberghe, director-general for climate action, rejected calls to dilute the system in response to the energy crisis. Instead, the upcoming July reform will focus on making the Market Stability Reserve more responsive to scarcity and price stability. The goal is to provide a predictable price floor that encourages industrial decarbonization rather than relying on arbitrary political interventions.

ETS2 and International Credits The European Parliament’s ENVI committee has approved a compromise to extend the supply-control mechanisms of the new heating and transport carbon market (ETS2) until 2035. This deal includes a 45-euro price cap to shield households from excessive costs. Simultaneously, the Commission signalled a preference for a centralized, state-led framework for purchasing international carbon credits to meet 2040 targets, moving away from direct corporate offset use for compliance to ensure higher quality standards.

Indonesia Regulatory Milestone Indonesia has finalized new regulations governing forestry-based carbon trading. This framework clears the path for major projects, including the Katingan Peatland restoration, to issue a record-breaking volume of carbon credits. The regulation allows for international trading provided projects align with the nation’s climate commitments, marking a significant step for the voluntary carbon market in Southeast Asia.

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Renewables and Biofuels

The U.S. residential solar sector continues to face significant headwinds. Freedom Forever, one of the nation’s largest installers, has filed for bankruptcy, citing the removal of federal tax credits, higher tariffs, and elevated borrowing costs. The market is expected to contract by nearly 20% this year as the industry adjusts to a less supportive federal policy environment.

In contrast to solar, the Trump administration has indicated it will preserve 5 billion dollars in funding for hydrogen hubs and carbon capture projects, viewing them as essential to domestic industrial strategy. In the private sector, logistics leaders are moving ahead with long-term decarbonization; DHL and IAG Cargo signed a five-year deal for 240 million liters of sustainable aviation fuel (SAF) to reduce air freight emissions by an estimated 640,000 tons of CO2.

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Corporate Sustainability and Regulation

The International Organization for Standardization released ISO 14001:2026, the first major update to its flagship environmental management standard in a decade. The new version emphasizes measurable progress on biodiversity and resource efficiency over mere target-setting. Leading the corporate response, Henkel unveiled updated 2030 targets, aiming for a 42% reduction in operational emissions and 100% recyclable packaging, demonstrating that long-term sustainability planning remains a core priority for global industrials.