During my long flight, I had some time to read up on the current global energy crisis. And it is far more dramatic than many believe.

As many of you probably know, I'm also very interested in energy policy and the chip industry. If you're passionate about AI, you have to consider these two areas. AI is a complex field, not an isolated one. That's why I've taken a closer look at the current crisis:

Europe is approaching winter with unusually low gas reserves while damage to energy infrastructure and disrupted shipping routes are reducing the supply of oil, diesel and LNG. Even Qatar (!) is now seeking replacement gas from the US.

The situation as of today:

The IEA estimates that more than 10 million barrels a day of Gulf oil production remained shut in during August. Global observed oil inventories have fallen by 507 million barrels since February. (sources all below)

Gulf diesel and gasoil net exports averaged just 390,000 barrels a day in August, barely above one-quarter of their prewar level. That helps explain why fuel markets can remain extremely tight even when crude prices fall.

Here are the main facilities and routes affected as of today:

• Strait of Hormuz: Shipping remains severely restricted, although some tankers are getting through. Before the war, roughly 20 million barrels of oil passed through daily. However, that is the route’s historical flow, not a measure of today’s missing supply. Producers have cut output because they cannot reliably export it.

• Saudi Arabia’s East-West Pipeline and Yanbu: Three pumping stations were reportedly damaged. The pipeline had been moving roughly 4–5 million barrels daily, providing a crucial alternative to Hormuz. Full repairs could take five to six weeks, according to sources cited by Reuters

• Yanbu loadings were suspended and some late-September cargoes for European customers cancelled (pretty bad for europe). Saudi Arabia is offering additional shipments via Oman to offset part of the disruption tho.

• Ras Laffan, Qatar: Iranian strikes damaged two of Qatar’s 14 LNG production lines, removing approximately 12.8 million tonnes of annual LNG capacity, or 17% of the country’s total. Repairs are expected to take three to five years! Shipping restrictions affect exports from the remaining capacity too, so reopening Hormuz would only solve part of the problem.

• Russian diesel refineries: As reported on September 15, Kirishi was fully shut, while Volgograd and NORSI were operating at about 25% of their rated capacity following drone damage. These are three of Russia’s six largest diesel-producing refineries. Russia has also restricted fuel exports.

• ExxonMobil Joliet, Illinois: The refinery remained offline on September 17 after a September 13 power outage. Its crude-processing capacity is approximately 275,000 barrels daily.

For gas, the IEA measured a 35-billion-cubic-metre year-on-year decline in LNG loadings from Qatar and the UAE during March–June. That is a historical cumulative shortfall

QatarEnergy is now reportedly negotiating for 2–3 million tonnes of US LNG annually through 2031 to replace unavailable supply. One of the world’s largest LNG exporters is competing for replacement cargoes that European and Asian buyers also need. Read that again and let that sink in.

Europe has a smaller winter buffer:

European gas storage was around 69% full in Reuters’ September 17 report, versus a five-year seasonal average of 85%. Germany was approximately 56% full on September 16.

Germany entered September at roughly 53%, its lowest level for that point in the year in 15 years of records. INES modelling indicates that reaching 77% by November could cover a normal winter under its assumptions, but would still leave supply shortfalls under extremely cold conditions.

The consequence is clear: further rising prices, possibly rationing in the event of worsening shortages, and at the same time increasing dependency. Record prices are already being seen at gas stations in Europe. Airlines are already planning for partial cancellations. The long-term damage is not yet foreseeable, especially since there is no end to the war in sight.

Later I will discuss what this has to do with AI, data centers, etc.