US crude futures dropped more than 2% Monday after President Trump said he would hold off on a scheduled attack on Iran , Reuters reported. The relief was brief. The International Energy Agency's Fatih Birol calls the Hormuz crisis "the largest supply disruption in the history of the global oil market," and roughly 15.8 million barrels per day remain stranded -- enough to run the entire United States for nearly three weeks.
So the White House did what it said it wouldn't: it extended sanctions waivers on Russian crude oil and petroleum products already loaded on vessels , according to the Financial Times. The second extension in as many months. OilPrice.com reported the waiver keeps India's Russian crude lifeline open , allowing Asian refiners breathing room as Middle Eastern barrels stay locked behind Iranian mines and drones. The irony is sharp. Two US adversaries -- Iran and Russia -- are now central to managing an oil shock triggered by US military action.
Meanwhile, the national average price of gasoline stands at $4.47 per gallon, up $1.33 from a year ago , GasBuddy data shows. American consumers have paid $45 billion more on fuel since the Iran war began -- a figure that lands hardest on lower-income households. US gasoline topped $4 a gallon for the first time since August 2022 , according to AAA, just as Memorial Day weekend approaches with 45 million travelers expected to hit the road .
Can Diplomacy Outrun the Drain?
Global oil inventories were at a five-year high when the war started. Seven weeks later, they're draining at 200 million barrels per month , according to SolAbility analysis. The IEA estimates cumulative supply losses exceeded 360 million barrels in March with roughly 440 million barrels projected for April . Normal Hormuz flow is about 13 million barrels per day -- one-fifth of global consumption.
The math is unforgiving. A Dallas Fed model projects the closure could raise West Texas Intermediate to $98 per barrel in the second quarter and lower global real GDP growth by an annualized 2.9 percentage points . If shipping remains disrupted for three quarters, oil could hit $132 per barrel by year-end . Sustained closures lasting weeks to months carry the potential to push crude toward $175 per barrel under prolonged disruption scenarios, analysts warn.
Even if talks succeed, the relief won't be immediate. An LSU Shreveport economist estimates that even if the strait opens tomorrow, prices won't drop for two weeks to a month or more . Physical oil market tightness is projected to persist for at least three months beyond any resolution , according to World Oil analysis. The supply chain doesn't snap back. It crawls.
What Happens When AI Needs More Power Than Oil Can Deliver?
NextEra Energy will buy Dominion Energy in an all-stock deal valued at nearly $67 billion , the companies announced Monday. The transaction will create the world's largest regulated electric utility by market value , CBS News reported. The target? Northern Virginia's "Data Center Alley," where Dominion alone has nearly 51 gigawatts of contracted data-center capacity tied to customers including Amazon, Microsoft, Alphabet, Meta, Equinix and CoreWeave .
One gigawatt can power roughly 750,000 homes . Dominion's 51 gigawatts could theoretically power 38 million homes -- except those electrons are spoken for by server farms training large language models and rendering video at scale. Power costs have climbed roughly 40% over the past five years, with especially sharp increases in regions dominated by data-center construction such as Virginia, Maryland, and Pennsylvania , according to government data.
The timing matters. Power demand is rising for the first time in two decades, opening up a lucrative revenue stream for utilities, NBC News noted. NextEra CEO John Ketchum said electricity demand is "rising faster than it has in decades" and projects are "getting larger and more complex" . Ketchum told Fortune that power players can only win the AI game if they have the scale and nationwide footprint to develop data center hubs without raising customers' utility bills . To that end, NextEra plans to provide $2.25 billion in customer bill credits across Virginia, North Carolina and South Carolina following the deal's completion .
The merger isn't happening in isolation. This year, AES Corp agreed to be acquired for $33.4 billion, following Constellation Energy's $16 billion deal for Calpine and Blackstone's $11.5 billion deal for TXNM Energy last year . Utilities are consolidating because the alternative -- letting tech giants build their own power infrastructure -- threatens to fragment the grid.
