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Oil markets on edge: Geopolitics, supply risks, and what comes next

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What lies ahead over the next year? Photo via Getty Images

Oil prices are once again riding the waves of geopolitics. Uncertainty remains a key factor shaping global energy trends.

As of June 25, 2025, U.S. gas prices were averaging around $3.22 per gallon, well below last summer’s levels and certainly not near any recent high. Meanwhile, Brent crude is trading near $68 per barrel, though analysts warn that renewed escalation especially involving Iran and the Strait of Hormuz could push prices above $90 or even $100. Trump’s recent comments that China may continue purchasing Iranian oil add yet another layer of geopolitical complexity.

So how should we think about the state of the oil market and what lies ahead over the next year?

That question was explored on the latest episode of The Energy Forum with experts Skip York and Abhi Rajendran, who both bring deep experience in analyzing global oil dynamics.

“About 20% of the world’s oil and LNG flows through the Strait of Hormuz,” said Skip. “When conflict looms, even the perception of disruption can move the market $5 a barrel or more.”

This is exactly what we saw recently: a market reacting not just to actual supply and demand, but to perceived risk. And that risk is compounding existing challenges, where global demand remains steady, but supply has been slow to respond.

Abhi noted that U.S. shale production has been flat so far this year, and that given the market’s volatility, it’s becoming harder to stay short on oil. In his view, a higher price floor may be taking hold, with longer-lasting upward pressure likely if current dynamics continue.

Meanwhile, OPEC+ is signaling supply increases, but actual delivery has underwhelmed. Add in record-breaking summer heat in the Middle East, pulling up seasonal demand, and it’s easy to see why both experts foresee a return to the $70–$80 range, even without a major shock.

Longer-term, structural changes in China’s energy mix are starting to reshape demand patterns globally. Diesel and gasoline may have peaked, while petrochemical feedstock growth continues.

Skip noted that China has chosen to expand mobility through “electrons, not molecules,” a reference to electric vehicles over conventional fuels. He pointed out that EVs now account for over 50% of monthly vehicle sales, a signal of a longer-term shift in China’s energy demand.

But geopolitical context matters as much as market math. In his recent policy brief, Jim Krane points out that Trump’s potential return to a “maximum pressure” campaign on Iran is no longer guaranteed strong support from Gulf allies.

Jim points out that Saudi and Emirati leaders are taking a more cautious approach this time, worried that another clash with Iran could deter investors and disrupt progress on Vision 2030. Past attacks and regional instability continue to shape their more restrained approach.

And Iran, for its part, has evolved. The “dark fleet” of sanctions-evasion tankers has expanded, and exports are booming up to 2 million barrels per day, mostly to China. Disruption won’t be as simple as targeting a single export terminal anymore, with infrastructure like the Jask terminal outside the Strait of Hormuz.

Where do we go from here?

Skip suggests we may see prices drift upward through 2026 as OPEC+ runs out of spare capacity and U.S. shale declines. Abhi is even more bullish, seeing potential for a quicker climb if demand strengthens and supply falters.

We’re entering a phase where geopolitical missteps, whether in Tehran, Beijing, or Washington, can have outsized impacts. Market fundamentals matter, but political risk is the wildcard that could rewrite the price deck overnight.

As these dynamics continue to evolve, one thing is clear: energy policy, diplomacy, and investment strategy must be strategically coordinated to manage risk and maintain market stability. The stakes for global markets are simply too high for misalignment.

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Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally appeared on LinkedIn.

U.S. LNG is essential to balancing global energy markets for the decades ahead. Photo via Getty Images

Houston expert: The role of U.S. LNG in global energy markets

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The debate over U.S. Liquefied Natural Gas (LNG) exports is too often framed in misleading, oversimplified terms. The reality is clear: LNG is not just a temporary fix or a bridge fuel, it is a fundamental pillar of global energy security and economic stability. U.S. LNG is already reducing coal use in Asia, strengthening Europe’s energy balance, and driving economic growth at home. Turning away from LNG exports now would be a shortsighted mistake, undermining both U.S. economic interests and global energy security.

Ken Medlock, Senior Director of the Baker Institute’s Center for Energy Studies, provides a fact-based assessment of the U.S. LNG exports that cuts through the noise. His analysis, consistent with McKinsey work, confirms that U.S. LNG is essential to balancing global energy markets for the decades ahead. While infrastructure challenges and environmental concerns exist, the benefits far outweigh the drawbacks. If the U.S. fails to embrace its leadership in LNG, we risk giving up our position to competitors, weakening our energy resilience, and damaging national security.

LNG Export Licenses: Options, Not Guarantees

A common but deeply flawed argument against expanding LNG exports is the assumption that granting licenses guarantees unlimited exports. This is simply incorrect. As Medlock puts it, “Licenses are options, not guarantees. Projects do not move forward if they are unable to find commercial footing.”

This is critical: government approvals do not dictate market outcomes. LNG projects must navigate economic viability, infrastructure feasibility, and global demand before becoming operational. This reality should dispel fears that expanded licensing will automatically lead to an uncontrolled surge in exports or domestic price spikes. The market, not government restrictions, should determine which projects succeed.

Canada’s Role in U.S. Gas Markets

The U.S. LNG debate often overlooks an important factor: pipeline imports from Canada. The U.S. and Canadian markets are deeply intertwined, yet critics often ignore this reality. Medlock highlights that “the importance to domestic supply-demand balance of our neighbors to the north and south cannot be overstated.”

Infrastructure Constraints and Price Volatility

One of the most counterproductive policies the U.S. could adopt is restricting LNG infrastructure development. Ironically, such restrictions would not only hinder exports but also drive up domestic energy prices. Medlock’s report explains this paradox: “Constraints that either raise development costs or limit the ability to develop infrastructure tend to make domestic supply less elastic. Ironically, this has the impact of limiting exports and raising domestic prices.”

The takeaway is straightforward: blocking infrastructure development is a self-inflicted wound. It stifles market efficiency, raises costs for American consumers, and weakens U.S. competitiveness in global energy markets. McKinsey research confirms that well-planned infrastructure investments lead to greater price stability and a more resilient energy sector. The U.S. should be accelerating, not hindering, these investments.

Short-Run vs. Long-Run Impacts on Domestic Prices

Critics of LNG exports often confuse short-term price fluctuations with long-term market trends. This is a mistake. Medlock underscores that “analysis that claims overly negative domestic price impacts due to exports tend to miss the distinction between short-run and long-run elasticity.”

Short-term price shifts are inevitable, driven by seasonal demand and supply disruptions. But long-term trends tell a different story: as infrastructure improves and production expands, markets adjust, and price impacts moderate. McKinsey analysis suggests supply elasticity increases as producers respond to price signals. Policy decisions should be grounded in this broader economic reality, not reactionary fears about temporary price movements.

Assessing the Emissions Debate

The argument that restricting U.S. LNG exports will lower global emissions is fundamentally flawed. In fact, the opposite is true. Medlock warns against “engineering scenarios that violate basic economic principles to induce particular impacts.” He emphasizes that evaluating emissions must be done holistically. “Constraining U.S. LNG exports will likely mean Asian countries will continue to turn to coal for power system balance,” a move that would significantly increase global emissions.

McKinsey’s research reinforces that, on a lifecycle basis, U.S. LNG produces fewer emissions than coal. That said, there is room for improvement, and efforts should focus on minimizing methane leakage and optimizing gas production efficiency.

However, the broader point remains: restricting LNG on environmental grounds ignores the global energy trade-offs at play. A rational approach would address emissions concerns while still recognizing the role of LNG in the global energy system.

The DOE’s Commonwealth LNG Authorization

The Department of Energy’s recent conditional approval of the Commonwealth LNG project is a step in the right direction. It signals that economic growth, energy security, and market demand remain key considerations in regulatory decisions. Medlock’s analysis makes it clear that LNG exports will be driven by market forces, and McKinsey’s projections show that global demand for flexible, reliable LNG is only increasing.

The U.S. should not limit itself with restrictive policies when the rest of the world is demanding more LNG. This is an opportunity to strengthen our position as a global energy leader, create jobs, and ensure long-term energy security.

Conclusion

The U.S. LNG debate must move beyond fear-driven narratives and focus on reality. The facts are clear: LNG exports strengthen energy security, drive economic growth, and reduce global emissions by displacing coal.

Instead of restrictive policies that limit LNG’s potential, the U.S. should focus on expanding infrastructure, maintaining market flexibility, and supporting innovation to further reduce emissions. The energy transition will be shaped by market realities, not unrealistic expectations.

The U.S. has an opportunity to lead. But leadership requires embracing economic logic, investing in infrastructure, and ensuring our policies are guided by facts, not political expediency. LNG is a critical part of the global energy landscape, and it’s time to recognize its long-term strategic value.

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Scott Nyquist is a senior advisor at McKinsey & Company and vice chairman, Houston Energy Transition Initiative of the Greater Houston Partnership. The views expressed herein are Nyquist's own and not those of McKinsey & Company or of the Greater Houston Partnership. This article originally appeared on LinkedIn.

Texas has a few LNG projects in the works, but it's unclear how the delay will affect them. Photo via Getty Images

Consideration for new LNG terminals delayed with climate risk in mind

decisions TBD

The Biden administration is delaying consideration of new natural gas export terminals in the United States, even as gas shipments to Europe and Asia have soared since Russia’s invasion of Ukraine.

The election year decision by President Joe Biden aligns with environmentalists who fear the huge increase in exports, in the form of liquefied natural gas, or LNG, is locking in potentially catastrophic planet-warming emissions when the Democratic president has pledged to cut climate pollution in half by 2030.

“While MAGA Republicans willfully deny the urgency of the climate crisis, condemning the American people to a dangerous future, my administration will not be complacent,'' Biden said in a statement Friday. “We will not cede to special interests. We will heed the calls of young people and frontline communities who are using their voices to demand action from those with the power to act.''

Texas has a few LNG projects in the works, but it's unclear how the delay will affect them.

The current economic and environmental analyses the Energy Department uses to evaluate LNG projects don't adequately account for potential cost hikes for American consumers and manufacturers or the impact of greenhouse gas emissions, the White House said.

Industry groups condemned the pause as a “win for Russia," while environmentalists cheered an action they have long been seeking as a way to counter Biden’s approval of the huge Willow oil project in Alaska last year.

“This decision is brave, because Donald Trump (the man who pulled us out of the Paris climate accords on the grounds that climate change is a hoax) will attack it mercilessly,'' environmental activist Bill McKibben wrote in an online post.

“But it’s also very, very savvy: Biden wants young people, who care about climate above all, in his corner. They were angry about his dumb approval of the Willow oil project,'' McKibben added.

A proposed LNG export terminal in Louisiana would produce about 20 times the greenhouse gas emissions of Willow, McKibben noted.

“And of course everyone understands that if Biden is not reelected this win means nothing. It will disappear on Day One when (Trump) begins his relentless campaign to ‘drill drill drill,'" he said.

Energy Secretary Jennifer Granholm said the pause will not affect already authorized export projects and noted that U.S. gas exports reached record highs last year. The pause will not immediately affect U.S. supplies to Europe or Asia, Granholm said, since seven LNG terminals are currently in operation, with several more expected to come online in the next few years.

"We remain committed to ensuring our partners' medium-term energy needs are met,'' she told reporters at a White House briefing late Thursday. If necessary, the Energy Department can allow exceptions for national security needs, Granholm said.

She and other officials declined to say how long the permitting pause will last, but said a study of how proposed LNG projects will affect the environment, the economy and national security will take "some months.'' A public comment period after that will likely delay any decisions on pending LNG projects until after the 2024 presidential election.

U.S. exports of liquefied natural gas began less than a decade ago, but have grown rapidly in recent years to the point that the U.S. has become the world’s largest gas exporter. Exports rose sharply after Russia's February 2022 invasion of Ukraine, and Biden and Granholm have celebrated the delivery of U.S. gas to Europe and Asia as a key geopolitical weapon against Russian President Vladimir Putin.

The American Petroleum Institute, the largest lobbying group for the oil and gas industry, turned those comments against the Democratic administration as it condemned Biden's action.

“This is a win for Russia and a loss for American allies, U.S. jobs and global climate progress," said Mike Sommers, API's president and CEO.

"There is no review needed to understand the clear benefits of U.S. LNG (exports) for stabilizing global energy markets, supporting thousands of American jobs and reducing emissions around the world by transitioning countries toward cleaner fuels'' and away from coal, Sommers said in a statement.

Biden's action "is nothing more than a broken promise to U.S. allies, and it’s time for the administration to stop playing politics with global energy security,” he said.

Granholm, who has made it a point to work with oil and gas executives even as Biden has exchanged sometimes pointed barbs with them, said “a lot has happened” since LNG exports began about eight years ago.

“We need to have an even greater understanding of the (global energy) market need, the long-term supply and demand of energy resources and the environmental factors,'' she said. “So by updating the analysis process now, we will be better informed to avoid export authorizations that diminish our domestic energy availability, that weaken our security or that undermine our economy. ‘’

Granholm emphasized the delay “is not a retroactive review of already authorized exports,'' nor is it intended to punish the oil and gas industry.

“We are committed to strengthening energy security here in the U.S. and with our allies, and we’re committed to protecting Americans against climate change as we lead the world into a clean energy future,'' she said.

Jeremy Symons, an environmental consultant and former climate policy adviser at the Environmental Protection Agency, called Biden's decision a “game-changer” in the fight against climate change.

“The president is drawing a line in the sand to put the nation's interests first and listen to climate science,'' Symons said in an interview. ”The days of massive fossil fuel projects like the CP2 project escaping scrutiny from the federal government are over. We now have a president who cares about climate change.''

Symons and other activists have targeted the $10 billion Calcasieu Pass 2 project, or CP2, along Louisiana's Gulf Coast, noting it would be the nation's largest export terminal if built. The project in Cameron Parish would export up to 20 million tons (18.1 million metric tons) of chilled natural gas per year, creating more greenhouse gas emissions than even the Willow project, which environmentalists have decried as a "carbon bomb.''

Symons called the gas project "bad for our nation, bad for our health and bad for our economy.''

Shaylyn Hynes, spokeswoman for the project’s owner, Virginia-based Venture Global, said the Biden administration "continues to create uncertainty about whether our allies can rely on U.S. LNG for their energy security.''

A prolonged pause on LNG exports "would shock the global energy market ... and send a devastating signal to our allies that they can no longer rely on the United States,'' said Hynes, who served as an Energy Department spokeswoman in the Trump administration.

"The true irony is this policy would hurt the climate and lead to increased (greenhouse gas) emissions, as it would force the world to pivot to coal'' instead of natural gas, Hynes said.

Climate activists dispute that, calling LNG a leading contributor to climate change due to methane leaks and an energy-intensive process to liquefy gas.

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6+ must-attend Houston energy transition events for June 2026

Mark Your Calendars

Editor's note: Summer is here, and June brings a slate of must-attend events for those in the energy transition sector. CLEANPOWER is already underway, and the month continues with EPC Show and InnovateEnergy Week. Mark your calendars and register now.

June 1-4, 2026 — CLEANPOWER 2026 Conference and Exhibition

CLEANPOWER unites policymakers, experts, and corporate leaders to solve the challenges that none can solve alone. This must-attend, four-day conference is packed with cutting-edge discussions about wind, solar, storage, and transmission; dealmaking; networking; and fun.

This event continues through June 4 at the George R. Brown Convention Center. Register here.

June 4, 2026 — Energy Capital Conference

Join 300+ investors, operators, and capital providers in Houston for high-impact conversations shaping the next phase of energy investment. Hart Energy’s Energy Capital Conference is designed for senior decision-makers to meet the capital partners behind today’s deals; see where capital is flowing; strengthen the relationships that move business forward; and get ahead of where investment is going next. A pre-conference half-day workshop, titled Institutional Investing in Energy Workshop, will take place June 3.

This event takes place June 4 at the Post Oak Hotel. Register here.

June 9 — Greentown Go Make Kickoff

Head to the Ion to celebrate the Greentown Go Make 2026 cohort. The open-innovation program with Shell Catalysts & Technologies and Technip Energies focuses on catalytic solutions for industrial decarbonization and the energy transition. Hear pitches from the founders and network with a select group of startups while enjoying food and drink.

This event takes place June 9 at the Ion. Register here.

June 11, 2026 — Goals & Gigawatts Kickoff Party

Head to downtown Houston for Goals & Gigawatts: The Power of & Kickoff Party. The exciting Houston Energy & Climate Week gathering will combine fútbol, culture, climate, energy, innovation, and community for one unforgettable afternoon. Celebrate the opening FIFA match in Mexico City while connecting with professionals, innovators, investors, community leaders, and organizations shaping the future of energy and climate initiatives in Houston and beyond.

This event takes place at 1:30 pm on June 11, and the location is provided after registering. Register here.

June 16-17, 2026 — Energy Projects Conference & Expo

The Energy Projects Conference & Expo (EPC Show) is the largest event in North America for professionals working at the heart of major energy projects. The essential event for engineering, construction, commissioning, operations and maintenance across multiple energy sectors brings together five leading conferences under one roof. Conference subjects span LNG exporting, hydrogen and ammonia, midstream, petrochem and refining, and sustainable aviation fuels.

This event begins June 16 at George R. Brown Convention Center. Register here.

June 22-24, 2026 — InnovateEnergy Week

InnovateEnergy Week 2026 brings together the Energy Drone & Robotics Summit, Industrial Digital Reality Summit, and Industrial AI Nexus Summit for three days of high-powered innovation in Houston. This highly anticipated event will unite 1,500+ industrial, energy, and engineering leaders to explore the future of autonomous operations, spatial computing, digital twins, XR, AI, geospatial intelligence, and remote systems from the stars to the seafloor.

This event begins June 22 at Woodlands Waterway Marriott. Register here.

New Texas water plan does not consider data center growth, critics say

For the Future

A draft of Texas’ 2027 State Water Plan is drawing concerns from some water protection advocates who say it fails to account for one growing industry: data centers.

The plan, created by the Texas Water Development Board, will guide tens of billions of dollars in water development projects over the coming decades.

On Memorial Day, people packed Lake Travis to enjoy the water and sunshine while the lake remains near full capacity. But some advocates warn drought conditions could quickly return.

“Once we get into August, September, we'll be probably right back in the same drought situation,” said Mike Clifford with the Greater Edwards Aquifer Alliance.

The Texas Water Development Board released the draft plan in April. It recommends thousands of water projects carrying a projected cost of $174 billion over 50 years.

“We're not as shocked about the dollar amounts as some people are,” Clifford said. "To secure our water future, that's not an insane amount to ask for."

However, Clifford said his organization was surprised the draft does not specifically account for the growing impact of data centers, which can consume large amounts of water.

“If you leave the data centers out, it's not really a plan in our opinion. It's going to have to be changed and it's going to fall short,” Clifford said.

According to Data Center Map, Texas is currently home to 461 data centers.

Clifford argues the state should use projected future growth, not just historical data, when planning for long-term water needs.

“They're looking at the previous 10 years or 20 years or whatever, and we didn't have a lot of data centers in Texas,” he said.

Researchers at the the University of Texas at Austin estimate data centers could account for as much as 9 percent of Texas’ total water use by 2040, or potentially surpass the oil and gas industry that same year.

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Read the full story from CultureMap news partner KVUE.com.

Houston startup strikes deal to develop hydrogen production plant in Canada

hydrogen partnership

Houston-based cleantech startup Vema Hydrogen has reached a tentative agreement with Canada-based CHARBONE Corp. to develop a hydrogen production and processing plant in Québec.

The deal would couple Vema’s production of engineered mineral hydrogen with CHARBONE’s purification, compression and distribution capabilities.

Engineered mineral hydrogen, also known as orange hydrogen, is produced underground by accelerating naturally occurring geochemical reactions in iron-rich rock formations, according to the journal Energy & Environmental Science.

“Across high-value markets — from aviation and maritime fuels to industrial gases — there is incredible demand for Vema’s low-carbon [hydrogen]. Now, more than ever, we need a pathway to deliver these low-carbon fuels,” Pierre Levin, CEO of Vema, said in a news release.

The project would enable Vema to expand into emerging markets like low-carbon maritime and aviation fuel, e-fuels and power generation. Incorporating CHARBONE’s capabilities, the agreement would also support Québec’s hydrogen supply chain.

“The market is demanding high-value industrial gases, and our customers need cleaner, more reliable supply. By pairing Vema’s [hydrogen] feedstock with our purification and distribution capabilities, we’re strengthening Québec’s position as a regional hub for next-generation hydrogen,” Dave Gagnon, CEO of CHARBONE, added in the release.

Vema said in February that it had completed drilling of its first two pilot wells in Québec, making them the world’s first pilot well for orange hydrogen. It’s the first time Vema’s technology has been used outside a lab.

“This pilot will provide the critical data needed to validate [our hydrogen] at commercial scale and demonstrate that Quebec can lead the world in this emerging clean energy category,” Levin said. “The quality of the rock within our core samples is exactly what we expected and is very promising for hydrogen yields.”

Shortly before Vema carried out the pilot drilling, it signed a 10-year deal with California-based energy technology company Verne Power to supply clean hydrogen for California data centers. Over the course of the 10-year agreement, Vema will boost annual production of orange hydrogen to more than 36,000 metric tons.

“There is a robust market for baseload power generation across the U.S., where data centers are straining the grid,” Levin said. “As we power California’s fastest-growing markets with clean hydrogen, we look toward expanding our hydrogen to markets globally and supporting AI-driven power hubs.”

Vema, founded two years ago, raised $13 million in seed funding in 2025.

“The energy transition and emerging uses of hydrogen have spurred demand for clean hydrogen,” Levin said in its funding announcement. “However, existing decarbonized hydrogen production methods simply don’t work — they are too costly and energy-intensive. Vema is here to change that. It’s time to unlock a new era of scalable, low-carbon hydrogen.”

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