ROI-ENERGY WATCH: 'Unacceptable' reality

By Ron Bousso

LONDON, May 11 (Reuters) - Energy Watch is a biweekly recap of the events and trends shaping global energy markets from ROI Energy Columnist Ron Bousso

Hopes for a breakthrough in the stalled U.S.-Iranian peace talks have come and gone since our last newsletter. On Sunday, President Donald Trump dismissed Iran's response to the latest U.S. proposal as "unacceptable," raising concerns that the 11-week-old conflict will drag on, keeping shipping through the Strait of Hormuz paralysed.

Oil prices rose by over 2% to above $103 a barrel on Monday, reversing some of last week’s sharp losses.

By now a clear pattern is emerging – Trump wants a quick resolution of the Iran war and the full re-opening of the strait, while Iran seeks heavy concessions from the United States in exchange for the lifting of its near-complete blockade on the vital waterway through which a fifth of the world’s oil and LNG flowed before the war.

So the standoff continues, even if some ships are making it through the strait, be it in coordination with Iran or by taking huge risk.

Meanwhile, the conflict continues to batter the global economy. Indian Prime Minister Narendra Modi on Sunday urged a ‌spate of measures to conserve fuel, including work-from-home practices and limits on travel and imports, following similar steps taken by many other Asian countries.

The Iran crisis will be high on Trump’s agenda when he travels to Beijing later this week for talks with Chinese President Xi Jinping, their first face-to-face meeting in more than six months. China has historically bought large volumes of oil from Iran, but whether it would be willing, or able, to influence Tehran’s position is far from clear.

The crisis goes far beyond oil and gas, though. Buyers of electric vehicles and consumers of diet cola in India may seem to be two groups with little in common, but they are both at risk from the fallout of the ongoing closure of the Strait of Hormuz, ROI Asia Commodities Columnist Clyde Russell wrote.

Finally, major oil companies are bracing for prolonged turbulence in energy markets, which should curb any temptation to ramp up spending after the Iran war concludes. Read more in my latest column.

In other news:

• Millions of Americans are unknowingly financing electric grid projects before they get any benefit. Policymakers, in an urgent bid to overhaul the nation’s aging electric grid, are increasingly letting utilities charge customers for power plants and transmission lines long before they’ve been built, according to a Reuters review of regulatory disclosures.

• Europe’s co-located renewable power and battery capacity is expected to surge more than 450% by 2030, with Germany the most attractive country ‌to build projects, a report by Aurora Energy Research showed on Monday.

As ever, don’t hesitate to contact me at ron.bousso@thomsonreuters.com or follow me on LinkedIn with any questions or thoughts.

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