By Ron Bousso, Reuters Open Interest Energy Columnist

I'm excited to announce that I'm now part of Reuters Open Interest (ROI), an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.

Hello Power Up readers,

The world’s attention has turned to the Middle East since Israel launched its surprise war on Iran on June 13, targeting military leaders, scientists, and nuclear and military sites across the country. Iran has retaliated with scores of ballistic missile attacks on Israel.

The conflict has put energy markets on high alert. Benchmark Brent crude prices have risen by 10% to over $77 a barrel since June 13. Investor focus remains squarely on the Strait of Hormuz, a narrow waterway between Iran and Oman in the Mideast Gulf, through which flows between 18 and 19 million barrels per day of crude oil and fuel, nearly a fifth of the world's consumption. Another 85 million tons of liquefied natural gas from Qatar and the United Arab Emirates were also sent through the strait last year, equivalent to around 20% of global demand.

While oil and gas flows out of the Middle East have so far been largely uninterrupted, there has been some disruption. Iran on Saturday partially suspended   gas production at the South Pars gas field in the Gulf, while the Haifa oil refinery in northern Israel was shut down following a lethal missile attack. A surge in electronic interference among commercial ship navigation systems around the strait of Hormuz and the wider Gulf has further hindered operations and raised safety concerns.

Speculation over whether U.S. President Donald Trump will join Israel's campaign has further amplified concerns about escalation that could potentially lead to a global energy shock.

I’ll discuss more implications of the Middle East conflict below and offer reading suggestions to keep you up-to-date on everything happening in energy markets this week.

Finally, we would also like to get your thoughts on the Power UP newsletter through a short survey.

As always, feel free to share your thoughts with me by emailing ron.bousso@thomsonreuters.com

Graphics are provided by Reuters.

Disrupting shipping lanes in the Gulf is almost guaranteed to drive energy prices higher, but it remains to be seen if Iran will choose to take that path, which many consider a doomsday tactic that would slash its own oil export revenue and potentially prompt a strong military response from the United States and its allies in the region.

A look at oil tanker rates can provide a good real-time gauge of the escalating tensions. Benchmark rates for crude oil tankers from the Middle East to China have risen by nearly 50% since last week, reflecting the high risk premium tanker owners are now charged to move through the strait.

Meanwhile, China, which buys most of Iran’s oil exports of over 1.5 million bpd, has built up a large oil stockpile that will help it mitigate any disruption to Mideast supplies, ROI Asia Commodities Columnist Clyde Russell wrote this week.

The conflict has also led to sharp gains in global diesel prices and refining margins, highlighting the vulnerability of diesel-heavy European consumers.

The Middle East is a major exporter of diesel, shipping 831,000 barrels per day in 2024, representing roughly 17% of global diesel seaborne imports, according to analytics firm Kpler. The majority of exports come from Kuwait, the United Arab Emirates and Saudi Arabia, which have all invested in expanding export-oriented domestic refining capacity in recent years.

Diesel is used for private and commercial transportation in Europe as well as industrial purposes, accounting for 44% of the region’s overall oil demand of 13.5 million bpd in 2024, according to the International Energy Agency. Europe’s imports of the refined fuel exceeded 1.2 million bpd last year, or roughly a fifth of the region’s total diesel consumption, according to the IEA.

My Reuters colleagues Parisa Hafezi and Angus Mcdowall wrote a fascinating piece about Iran's 86-year-old Supreme Leader Ayatollah Ali Khamenei, who cuts an increasingly lonely figure.

You might also enjoy this graphics-heavy article on Iran’s and Israel’s military arsenals.

Away from the Middle East, Ernest Scheyder had a look at America’s answer to China’s rare earth dominance: Oklahoma!

And Reuters reporter Nichola Groom did a deep-dive on America’s clean energy sector, which has many fans among President Trump’s base, complicating his budget bill. On the same topic, ROI Energy Transition Columnist Gavin Maguire looked at how energy equity investors are adjusting their positions in an attempt to pick winners and cut losers as the budget bill makes its way through congress.