Oil Markets Brace for Prolonged Disruption as Aramco Warns of Slow Recovery

Saudi Aramco CEO Amin Nasser warned on Monday that disruption to oil exports via the Strait of Hormuz is threatening to delay the market's return to normal until 2027, telling analysts that "the longer the supply disruptions continue, even for another few more weeks, it is going to take a much longer time for the oil market to rebalance and stabilize."

The market is losing around 100 million barrels of oil a week, Nasser said, adding that two to five vessels are crossing the strait daily versus around 70 in normal times.

The recovery could drag into 2027 if the situation continues until mid-June, Nasser said. According to market data, WTI crude traded at $71.50 per barrel on Monday, up 0.6%, while Brent crude stood at $75.20, up 0.5%.

Oil rose after President Donald Trump said a fragile ceasefire between the US and Iran is close to unraveling, prolonging the effective closure of the crucial Strait of Hormuz, with Brent futures advancing 2.9% to settle near $104 a barrel, the highest in almost a week.

"I would say the ceasefire is on massive life support," Trump told reporters Monday at the White House.

Alaska Emerges as "World's Hottest Play"

While the Middle East crisis dominates headlines, Shell no longer operates in Alaska and hasn't drilled a well in the state since its failed offshore exploration campaign more than a decade ago, and ExxonMobil hadn't bid on leases in years. That changed dramatically in March.

A controversial oil and gas federal lease sale in the National Petroleum Reserve in Alaska generated a new bidding record, producing $163 million in high bids, beating the $104 million mark set during the first competitive oil and gas lease sale in the Indiana-sized reserve, which was held in 1999 during the Clinton administration.

ExxonMobil, committing more than $7 million on some 138,000 acres, came as a particularly big surprise, as the company had not bid on a federal or state oil and gas lease in Alaska in more than a decade, according to data provided by Welligence, an industry research firm.

Repsol SA and Shell Plc, which bid jointly on many tracts, were the biggest winners with more than $91 million in bids, according to Interior Department data.

The Financial Times reported that oil majors are returning to Alaska as the state becomes the "world's hottest play" in Trump's "drill, baby, drill" era.

Hedge Funds Pivot to Biofuels Amid Oil Shock

As Brent crude oil prices settle near $120 per barrel following the effective closure of the Strait of Hormuz, the agricultural complex is witnessing an unprecedented transformation, with corn, soybeans, and wheat no longer trading solely on weather patterns and harvest yields but becoming high-octane proxies for energy security and institutional inflation hedges.

The Financial Times reported that hedge funds are betting on biofuels to profit from the Iran oil price shock, with traders expecting corn and soybeans to soar as demand for alternative fuel sources rises.

Reuters reported that soaring oil prices in the wake of the U.S.-Israeli war on Iran are driving renewed demand for biofuels, with crude prices up more than 30% since late February before the war started, while prices for corn, a key biofuel ingredient, have risen just 5%.

Data from mid-March 2026 indicates that managed money has shifted to a four-year high net long position in grains, totaling over 635,000 contracts.

Elevated soyoil prices may continue to support robust crush margins as crude oil prices remain high due to global supply disruptions caused by the Iran war.

China's Teapot Refiners Cut Production

China's independent "teapot" refineries saw capacity utilization rates of 71.3% in January and 73.2% in February, both above year-ago levels, with smaller, independent teapot refineries in Shandong particularly active, with one major plant running at around 105% of its nameplate capacity.

However, OilPrice.com reported that some independent refiners in China are reducing their production rates as margins shrink and demand weakens amid the continued paralysis of tanker traffic in the Strait of Hormuz. The teapots' current run is powered by cheap feedstock bought before the Middle East conflict when benchmark Brent hovered around $73 a barrel, but new deliveries of these same sanctioned grades are being priced at a war-induced premium, directly eroding the margin advantage that drove the recent output surge.

The U.S. Department of the Treasury's Office of Foreign Assets Control is alerting financial institutions to the sanctions risks associated with independent "teapot" oil refineries in China, primarily in Shandong Province, given their continued role in importing and refining Iranian crude oil, with China purchasing approximately 90 percent of Iran's oil exports and teapot refineries accounting for the majority of these imports.

AI Data Centers Drive Energy Demand Surge

Data centers accounted for 17% of electricity demand growth worldwide last year, according to the IEA report, compared with around 50% in the U.S. MarketWatch reported that infrastructure giants such as GE Vernova and Bloom Energy are the new gatekeepers of the AI grid as Big Tech pursues a $700 billion AI energy grab.

Driven by data centre investments, the capital expenditure of five large technology companies surged to more than $400 billion in 2025 and is set to increase by a further 75% in 2026.

The IEA's Base Case finds that global electricity consumption for data centres is projected to double to reach around 945 TWh by 2030, representing just under 3% of total global electricity consumption in 2030.

Citing their excessive power demands, water usage, and effect on property values, communities across the country have swelled in opposition to data center construction, with a Pew survey last month finding that while Americans are likely to have positive views on the potential local employment and tax revenue upsides of data centers, they are even more likely to have negative views regarding the infrastructure's environmental cost and its energy usage.

Natural Gas Markets Heat Up

Natural Gas Intel reported that physical natural gas prices for Tuesday delivery strengthened across much of the United States as warmer weather forecasts, pipeline maintenance and improving regional demand expectations supported cash markets, while a sharp rally in futures added momentum to the gains. According to market data, Henry Hub natural gas traded at $3.25 per MMBtu on Monday, down 2.4%.