How an energy crisis unfolds

Summary

Unhedged: "How an Energy Crisis Unfolds"

Date: April 2, 2026
Hosts: Katie Martin (KM), Malcolm Moore (MM)

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Episode Overview

In this episode, Katie Martin (Markets Columnist, FT) speaks with Malcolm Moore (FT’s Energy Editor) about the escalating global energy crisis triggered by the war in Iran. They break down the crisis’s broad impact—especially on the world’s energy supply, prices, and logistics—exploring why markets failed to anticipate its scale and who is feeling the hardest pinch. The conversation also compares stock market and energy market reactions, discusses country-specific vulnerabilities, and outlines possible scenarios for the coming months.

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Key Discussion Points & Insights

1. The Global Energy Crisis Triggered by War in Iran

• Immediate Impacts:

  • Countries are imposing emergency measures: remote work in the Philippines, decreased aircon in Thailand, fuel emergencies in Zambia, empty stadiums in Pakistan, and European airlines anticipating summer flight cancellations ([00:25]-[01:53]).
  • "It's everywhere and it's pretty grim, especially for poorer countries." — Katie Martin [00:48]

• Why So Bad?

  • The global energy system is highly reliant on Middle East supplies, not just for oil and gas, but also other key resources like helium for chipmaking.
  • “The energy world sees how much we all depend on the Middle East for our oil and for our fuel and actually for a whole range of other things... and the energy world can see it because they're trying to manage getting hold of these supplies in a world where, you know, a fifth of them have just been knocked out.” — Malcolm Moore [02:18]

2. Miscalculations and Market Blind Spots

• Oil Traders Got It Wrong:
  • At the start of the year, the consensus was for oil prices to stay low due to oversupply; events unfolded rapidly and unpredictably.
• Unexpected Shock:
  • No one expected both a prolonged conflict and a total chokepoint breakdown in the Strait of Hormuz, causing a fifth of global supply to be trapped ([03:00]-[04:58]).
  • “Nobody thought, oh, my God, this is going to go on for months. And the main export route for Middle Eastern oil and gas is going to be knocked out. And the world's biggest liquefied natural gas facility was going to be hit by missiles. Nobody had that on their bingo card.” — MM [04:30]

3. Scale of Supply Disruption & Immediate Consequences

• The Numbers:
  • "In April, the amount of oil the world has is going to fall by seven and a half million barrels a day... they're seeing that some of the demand for that oil is falling away ... about two and a half million barrels a day. So you then have a five million barrel a day gap." — MM [05:34]
• Real-World Shortages:
  • Asia is already facing shortages, with industries and restaurants shutting down for lack of fuel; Europe is just now seeing contracts dry up ([06:09]-[08:09]).
  • Legal consequences are unfolding over failed delivery contracts (force majeure declared; legal battles expected).

4. Global Impact—Who Is Hit Hardest?

• Rich vs. Poor Countries:

  • Wealthy, energy-import-reliant countries (e.g., Singapore) can pay up; poorer countries (e.g., Morocco, parts of Africa) face rationing and disruptions.
  • “If you're Uganda or you're Zambia and you're at the end of a sort of long logistical chain, that's a problem.” — MM [11:02]

• Logistics and Industry:

  • Europe is now seeking replacement supply via creative and long routes, e.g., US Gulf Coast to Australia (13,000-mile haul).
  • Air travel is threatened: even countries with reserves (e.g., Switzerland) face flight issues, as refueling abroad is dicey. Airlines like Ryanair expect to cancel flights ([11:26]-[11:58]).

5. Best- and Worst-Case Scenarios

• Best Case:
  • "We wake up from a dream...the Strait of Hormuz is open... in a few months time energy flows will get back to normal." — MM [12:26]
  • Realistically, even a swift resolution means high prices for the rest of the year ([12:39]-[12:50]).
• Worst Case:
  • Ongoing uncertainty, rising prices, increasing shortages, inflation, and eventual demand destruction ([13:09]-[13:59]).
  • “It's as ever, it's the uncertainty that kills us.” — MM [13:57]

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Notable Quotes & Memorable Moments

• “The lawyers always win.” — Katie Martin, on the looming legal wrangles over failed energy contracts [07:04]
• “Coal is cheap. And it's abundant in a lot of places. And the places that have it will be digging it up and burning it... instead of burning gas, they're basically going to switch to coal.” — MM [15:12]
• “What a happy thought there, Malcolm, for everyone to take into their long weekend.” — KM, summarizing the somber mood [13:59]

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Important Segment Timestamps

• Opening and Energy Crisis Impact Overview: [00:25]–[02:18]
• Expert Analysis: How Energy Markets Are Freaking Out: [02:18]–[04:58]
• Supply Shock Numbers and Early Effects: [05:23]–[08:36]
• Country-by-Country Breakdown: [09:36]–[11:26]
• Aviation and Knock-on Effects: [11:26]–[12:16]
• Best/Worst Case Scenarios: [12:22]–[13:59]
• Long/Short Segment: [15:01]–[16:16]

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Tone & Style

Conversational, occasionally wry and sardonic (especially regarding market optimism and the "happy" consequences of the crisis), but packed with clear, expert explanations.

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Summary for New Listeners

This episode spotlights the global ripples of a Middle East energy shock: how most analysts underestimated the risk, why shortages and price spikes are escalating, and why the worst pain is being felt in poorer, import-dependent nations. The conversation candidly covers the chasm between market complacency and energy market panic, the escalating legal and logistical chaos in oil and gas supply chains, and how different nations are improvising or suffering. While scenarios range from grim to merely challenging, the real sticking point is uncertainty—and the reality that even the best outcome means prolonged high prices and turmoil for world energy and economies.

Transcript

[A]

Bull or bear? Trade or tariff. Future or fad? There's more than one side to every story. With the Flip side podcast from Barclays Investment bank, you'll hear two research analysts having a provocative debate on hot topics in business and markets. Listen to the Flip side on your favorite platform,

[B]

Pushkin. If you're listening to this here podcast, you're maybe driving your car or walking the dog or just generally going about your life as usual. Happy days. But in large parts of the world, the energy crisis coming from the war in Iran is really starting to bite. In the Philippines, people are being asked to work from home. Thailand is asking residents to turn down their aircon. Zambia has declared a fuel emergency. Pakistan has kicked off its cricket league to empty stadiums as people try to save on super pricey fuel. In Europe, airlines are warning they may have to cancel flights in the summer. It's everywhere and it's pretty grim, especially for poorer countries. And even in a best case scenario where world peace breaks out tomorrow, you can't just flip a switch and get supplies back to normal. Today on the show, who's really feeling the pinch and how bad is this gonna get? This is Unhedged, the Markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at FT Towers in sunny London, about to get out of here for four whole days of a super long holiday weekend. And joining me in the studio, it's another Brit takeover, folks. We have Malcolm Moore, the FT's energy editor and a very busy man taking time away from the fire hose of energy market news to tell us Muggles what's what. Malcolm, thanks for coming.

[C]

Our pleasure to be here.

[B]

We know you've got a lot on your plate now, so one thing that I keep mentioning on this pod is that when I talk to people in stock markets, they're like, la, la, la, taco trade, everything's fine. I'm sure this is going to work out. When I talk to people in the energy market, they're like, holy moly. I cannot overstate how bad this situation is. How, how much are people in your world freaking out right now?

[C]

Yeah, I mean, I think that they've been freaking out for probably a month now. Let's say you're absolutely right. The energy world sees how much we all depend on the Middle east for our oil and for our fuel and actually for a whole range of other things, you know, some of which have been mentioned, but some of which are kind of being ignored a little bit, you know, helium, for example, very Important for chip making. A lot of that comes from the Middle East. So we depend on the Middle east for all sorts of things. And the energy world can see it because they're trying to manage getting hold of these supplies in a world where, you know, a fifth of them have just been knocked out.

[B]

Yeah. Because it can't get through the Strait of Hormuz. And that's just that.

[C]

Exactly.

[B]

So I was reading your story today that you did with our colleague Leslie Hook about how oil traders went into this situation. Basically just like the rest of us, they called this totally wrong. Right. They were all expecting oil prices to fall further over the course of this year, and whoops, that did not work out.

[C]

So let's just go back to the beginning of this year. At the beginning of this year, everybody was saying there was a glut in the oil market.

[A]

Right.

[C]

If you remember, around the turn of the year, the Brent oil price, so Brent is the, is the sort of international benchmark. The Brent oil price was around $60 a barrel. And everybody was saying, okay, it's going to be $60 a barrel all year and oil company is going to really struggle. How's anybody going to make any money in this environment? In the US you had people in the shale patch saying, well, we're going to shut down, we're not going to produce anymore. The world was supposed to be awash with oil. And then, of course, we had little taste of unpredictability with Venezuela.

[B]

Yeah.

[C]

And so that. But that was pretty brief. Right. You know, the Venezuela episode didn't last very long, and everyone's like, oh, okay,

[B]

we've all forgotten about that.

[C]

Yeah, yeah, yeah, yeah, it's fine. These things, you know, and if anything else happens, maybe that will also be brief. And I think the expectation. There was obviously a lot of signaling going into the Iran war that the US Was going to do something. Right. They were moving aircraft carriers, they were, they were moving troops into position so everybody could kind of see stuff. But I think there was still an assumption that, okay, what's the worst case scenario? The worst case scenario is maybe it's. It's going to be a short, quick thing. Nobody thought, oh, my God, this is going to go on for months. And the main export route for Middle Eastern oil and gas is going to be knocked out. And the world's biggest liquefied natural gas facility was going to be hit by missiles. Nobody. Nobody had that on their bingo card.

[B]

Yeah, yeah. Even the pros. And so, you know, in the UK everything looks pretty normal. Right. You go fill up your car like perfectly normally. It's expensive, but you go and fill up your car perfectly normally. There are parts of the world though, that we've done some really good coverage on this, I think at the ft. There are parts of the world that are really feeling the pinch now. Are they running out of the stuff? What is going on here?

[C]

So let me take you through the numbers very quickly, right? And everybody's got slightly different numbers, but I'm just going to use the numbers from a company called OilX, just because they're the first ones that I looked at this morning.

[B]

Fine. That's a good enough reason for unhedged.

[C]

So Oil X reckons that in this month, in April, the amount of oil the world has is going to fall by seven and a half million barrels a day. That is the oil that's trapped inside the Gulf that cannot get out. Right. They also are seeing and forecasting that some of the demand for that oil is falling away. So as you say in Asia, which is the main customer for Middle Eastern oil, those countries have already just stopped doing things, right. They've turned off air conditioners, they're working four day weeks. You know, in India, lots of restaurants have closed because they can't get hold of the gas canisters, the propane that they need to cook with. So, so there's been a fall, but the fall is only around two and a half million barrels a day. So you then have a five million barrel a day gap.

[B]

Right.

[C]

So that oil has just disappeared off the market. So two reactions to that. Prices go up and they go up everywhere. But then some people who had contracts and were hoping for tankers to pull up and deliver stuff, those tankers have now stopped. Right? I mean, they were at sea when the war began, so there's a little bit of a lag. But in Asia, the last deliveries of Middle Eastern energy have ceased because while

[B]

a tanker is at sea, it can get a better offer. Right. And, and change direction.

[C]

Yeah, well, so that also is happening. I mean, it depends on the contract. And there's going to be a huge legal mess at the end of all of this.

[B]

The lawyers always win.

[C]

The lawyers are going to win big time because of course people are looking at their contracts, which may have been priced before the war, and they're looking at the prices they could get for the same fuel now and thinking, oh well, is it worth the legal cost of breaking that contract? Can I get away with declaring force majeure? Right. And saying it's out of my Control, it's the war, and therefore I won't have to compensate people. Can they. Can they get away with that? People are definitely trying to do that. Of course, lots of people are, you know, quite entitled to be declaring force majeure. I should say. If you are Qatar and your gas plant's been blown up, it seems fair enough that you can say, I can't supply.

[B]

That seems reasonable.

[C]

But there will be a lot of legal wrangling even over that as well. Tight definitions. You know, a lot of the contracts say, you know, I'm buying a tanker of oil from a specific location or a gas cargo from a specific location. If they're saying that, okay, maybe that location's out, I can declare force majeure. If it just says I have to supply you with this cargo, then you may have to make it up from somewhere else.

[B]

Right.

[C]

The cargoes that are going to Asia have all arrived and you are seeing shortages. The cargoes that are coming to Europe, those are now beginning to come to an end. So Europe is now in a position where it's having to think, where can I get stuff to substitute? And we're seeing lots of interesting routes emerging around the map. You know, there are now tankers that are making the journey from the US Gulf coast to Australia.

[B]

That's a long way.

[C]

It's. I think it's 13,000 miles. It takes a really long time to go there in a tanker. But Australia, which unfortunately had actually closed down a lot of its refineries, is in a very difficult position because it's a long way away from everywhere. And so it's kind of difficult to plan ahead. Places like Europe, you can plan ahead a little bit more easily. You're rich, so you can afford to pay a little bit more. You're unlikely to see the sort of things that we're seeing in Asia replicated in Europe. Depends how long this crisis goes on for. Obviously in the United States, it's the world's biggest oil and gas producer, so they're not going to run out of oil and gas in the US but they're going to have to pay market prices. Right. Why is the price of gasoline $4 a gallon in the U.S. well, it's because the U.S. could be selling the same gasoline to people who are desperate for it in Europe or even in Asia at this point and making a lot more money. So obviously the prices are going to have to rise.

[B]

So this is going to affect different countries and different industries in different ways. So, for example, one thing that stuck out from the piece that we've got today on our website about this, sort of like energy rationing is, if you're Singapore, you are completely reliant on energy imports. I think you rely on it for something like 98% of your energy needs or something. Ridiculous. But you're a very rich country and you can afford to pay up. If you're Morocco, you're very reliant on. On energy imports and you just don't have the same cash at hand. So which countries do you think are really going to get it in the neck here?

[C]

Well, I mean, we've already seen, obviously, South Asia, Pakistan, Bangladesh, India, there are some issues there. And we've. We've also seen in Southeast Asia, you know, countries like Thailand, Vietnam, Philippines, declaring emergencies, taking steps to kind of reduce their demand. I think after this, you're likely to see probably some places in Africa. I mean, it's partly. These are not big markets anyway. Right. So they're not huge customers for people. So if you're. If you're thinking about prioritizing customers at this point of time, you may not prioritize the customers who don't buy as much from you to start with. They also don't have the sort of strong logistics networks that. That the UK or France might have.

[B]

You might be landlocked.

[C]

The UK is blessed with having two huge oil majors, Shell and bp. Right. Those guys can source fuel. Right, then. So the UK is going to be relatively shielded just by logistics. But if you're Uganda or you're Zambia and you're at the end of a sort of long logistical chain, that's a problem. The other problem, of course, is that. And this is a particular problem in jet fuel. Right, right.

[B]

So I was going to ask.

[C]

Yeah, so Switzerland, for example, they like to say that they've got loads of jet fuel and they do, they've got huge reserves of jet fuel, which is great for Switzerland. If your flight is leaving from Switzerland, though, it still has to refuel wherever it gets to. Right, so.

[B]

So if you want to fly within Switzerland, which would be a strange thing to do because it's got quite good trains, then you'll be fine. But. Yeah, no, that's a good point.

[C]

You just have to worry that you're taking a flight somewhere. Are you going to a place where they're likely to have fuel to get you back?

[B]

Yeah. And so we've got Ryanair, for example, saying, yeah, we might have to cancel some flights in the summer. And I think that's just an interesting thing about this Whole crisis is that by the summer, hopefully this whole thing will be over. But Malcolm, give us something to hope for. What's the best case scenario here? How can this work out and kind of be okay?

[C]

The best case scenario is that we wake up from a dream.

[B]

Yes.

[C]

And everything is fine. And the Strait of Hormuz is open and Iran isn't going to assert any sort of sovereign control over it in the future. And then in a few months time energy flows will get back to normal

[B]

and we'll pretend even in that situation it stretches out.

[C]

Oh, even in that situation, we're looking at high prices to the end of the year, I think.

[B]

Right.

[C]

But that's the best case scenario, so

[B]

that's as good as it is.

[C]

Also, it's not a hugely realistic scenario.

[B]

No, no, that is also true. So that's the best case scenario realistically, like not being a show off just to kind of get headlines in the newspaper. What are people saying to you? Is, is the, is how bad could this get?

[C]

Well, the worst case scenario is really a continuation of the situation that we find ourselves in, which is total uncertainty about how long this goes on for. Right. The market has consistently priced this as being a short term event and is still hoping against all hope that it's a short term event. But if we grind forward month by month, there's basically a mechanical line that goes up and prices will just continue to rise and there'll be more disruption and more shortages and some countries will absolutely run out of various types of fuel and then we'll see, you know, a lot of demand destruction, some of which you've already mentioned. But you know, everything's going to get more expensive, there's going to be more inflation, so on, so on. I mean, that is all a worst case scenario and it's really, it's as ever, it's the uncertainty that kills us.

[B]

Yeah, yeah. What a happy thought there, Malcolm, for everyone to take into their long weekend. Thank you for infecting our listeners with your with the enthusiasm and joy of the FT's energy desk.

[C]

Well, you have to laugh or you will cry.

[B]

This is true. We are going to be back in just one second with Longshore.

[D]

Today's markets move fast. Get the insights you need in 10 minutes with the Barclays Brief, a new podcast from Barclays Investment Bank. Through sharp dialogue and scenario based analysis, our leading experts analyze key market themes each week. So whether you're managing a portfolio or leading a business, the Barclays Brief podcast can help you make smarter decisions today. Stay sharp, stay Briefed. Find Barclays Brief. Wherever you get your podcasts,

[B]

It is time for Long Short. That part of the show where we go long a thing we love or short a thing we hate. Malcolm Moore, what you saying?

[C]

Well, at this point, you could go long on any form of energy you wanted to, but the one I'm gonna choose is coal rockets. Because coal is cheap.

[B]

Yes.

[C]

And it's abundant in a lot of places. And the places that have it will be digging it up and burning it. And, you know, instead of burning gas, they're basically going to switch to coal.

[B]

Are there any potential downsides to that?

[C]

I mean, the world's going to heat up a little bit, but, you know, the US President will be very happy. He's very long coal himself.

[B]

Right, cool. Long coal. I am sure how gullible markets are, especially stock markets. Right. So every time Trump says something along the lines of peace in our time, Iran are desperate for a deal, you know, we're gonna bring this to a close. Every time the stock market jumps and it's like, guys, knock it off. Like, why do you keep doing this? It's been wrong. Every time he said it over the past month, it is still wrong now. The taco trade is dead. Just stop it.

[C]

Yeah, I mean, I have to say even the Iranians are correcting him online at this point. And so if the Iranians are ahead of you in the trade, then you're on the wrong side of the trade.

[B]

Yeah. When Trump says something and then you wait for a confirmation from Iran, something has gone quite, quite skew. If. But yeah, I just wish people would, like, knock it off. Right then. Lovely long weekend, Malcolm. I hope you get a long weekend too, and you're not working for the whole of it. I'm certainly out of here. So, listeners, we will be back in your ears on Tuesday. If you celebrate it, Happy Easter. If you don't, but you get a long weekend, enjoy that. And if neither, just be happy on our behalf. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher Forehead. Cheryl Brumley is the FT's global head of audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free and a 30 day free trial is available to everyone else. Just go to ft.com unhedgedoffer I'm Katie Martin. Thanks for listening.