Ukraine’s military has said it struck an oil refinery in Russia’s Saratov region in an overnight drone attack, causing explosions and destruction, according to an army statement, as daily aerial exchanges intensify with diplomatic momentum to end the war in play.
Saratov’s governor said on Sunday that one person was killed and several residential apartments and an industrial facility were damaged, but did not mention the oil refinery being struck.
“[Ukrainian] drones are targeting … deeper into Russian territory [than] in the past, where previous attacks have been focused on the line of contact in the south and the western parts of Russia,” said Al Jazeera’s Osama Bin Javaid, reporting from Moscow. It is still unclear whether Ukraine’s claims that it hit a refinery are true, he added.
Ukraine’s military also said on Sunday that it had taken back a village in the Sumy region from the Russian army, which has made significant recent gains there.
Ukrainian troops have “liberated and completely cleared” Russian forces from Bezsalivka, the military general staff said in a Telegram post. It said 18 Russian troops had been “eliminated” in the fighting.
In Ukraine, three swimmers were killed by unexploded objects in the country’s southern Odesa region at two beaches where swimming has been banned, regional officials said on Sunday. The Black Sea region has long been a popular summer destination, but authorities have urged caution since Russia’s full-scale invasion left mines scattered near its coast.
“All of them were blown up by explosive objects while swimming in prohibited recreational zones,” Regional governor Oleh Kiper said in a statement.
On Saturday, Russia launched a drone attack on a bus in Ukraine’s Kherson region, killing at least two people and wounding 16 others, according to Ukrainian officials.
Another drone hit the bus as the police were responding to the attack, injuring three officers, the police added.
Russian attacks on Ukraine’s Zaporizhia region also killed two people travelling in a car in the Bilenkivska community on Saturday, as well as a 61-year-old woman who was in her home in the Vasylivka district, a local official reported.
Ukraine’s air force said it intercepted 16 of the 47 Russian drones launched overnight, while 31 drones hit targets across 15 different locations.
Russia’s Defence Ministry said its air defences shot down 97 Ukrainian drones over Russia and the Black Sea overnight and 21 more on Saturday morning.
Europe stresses support for Ukraine ahead of Trump-Putin talks
Ukraine’s President Volodymyr Zelenskyy has rejected any suggestion of land concessions to Russia as international efforts to end the war continue.
Trump, who had promised to end the war within 24 hours of reentering the White House in January, plans to meet Putin in Alaska on Friday, saying the parties were close to a deal that could resolve the conflict.
Trump is reportedly open to inviting Zelenskyy to Alaska, but there has been no confirmation as of yet. Putin has insisted the conditions must be right for him and the Ukrainian leader to meet in person.
The leaders of the United Kingdom, France, Germany, Italy, Poland and Finland, together with European Commission President Ursula von der Leyen, on Sunday issued a joint statement welcoming Trump’s efforts, while stressing the need to maintain support for Ukraine and pressure on Russia.
“The emphasis [of the European statement was] … that this is a war that is in Ukraine, but is in Europe too, and has huge potential ramifications for European security,” said Al Jazeera’s Charles Stratford, reporting from Ukraine’s capital of Kyiv.
The Wall Street Journal also reported that European officials who met US Vice President JD Vance in the UK on Saturday had presented a counterproposal for peace, which included demands that a ceasefire must take place before any other steps are taken.
The proposal also said that any territory exchanges must be reciprocal, with firm security guarantees.
UKRAINE’S fight against Putin’s illegal invasion is vital for all of Europe.
The Ukrainian people are fighting bravely for their freedom, their independence and their rights.
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Firefighters at scene of a Russian rocket attack on Dnipro in eastern UkraineCredit: East2West
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A Russian gas pipelineCredit: Getty
But American security is on the line there, as well as British and European security.
That is why we and European allies have been providers of military aid to Ukraine.
And we recognise the indispensable role of the US in that.
It is also why President Trump’s recent decision to make more weapons available for Ukraine’s brave resistance is very welcome.
And we share the President’s frustration with Putin’s continual delaying tactics and maximalist demands.
It is clear that Putin is not negotiating in good faith.
Tighten screws
The pressure must continue to grow on Putin, to make clear that this awful war, and his wanton campaign of aggression, must come to an end.
As the UK and US get down to hard talks ahead of next week’s summit, Europe must ramp up the pressure, too.
We, as HM Opposition, will not write the Government a blank cheque.
But we stand squarely with them in defending our national interest and that means resisting Putin’s illegal war.
Nazi lies, Vlad’s propaganda & troops on border… chilling signs Putin ready to invade ANOTHER European nation after Ukraine
Russia has so far failed to achieve its war objectives.
It has suffered enormous casualties and, in desperation, Putin has had to turn to Iran for weapons and North Korea for troops.
Three years on, and despite what Russia claims, the cost to its economy has been enormous and is unsustainable.
I am proud the Conservative government, working with allies, helped to drive forward the largest and most severe set of sanctions Russia has ever seen to cripple Putin’s war machine.
Through the tough and wide-ranging sanctions delivered by the international community, Putin has been denied $400billion of funds since February 2022 — money that could otherwise have been spent on this illegal war.
But we cannot stop here. The screws must continue to tighten.
Pulling in the same direction
The US is right that we need all the world’s major economies to be pulling in the same direction.
There can be no place for Russian oil on our continent. There must be no safe harbour for Russian ships.
There must be no let-up in our collective fight against Russia in every corner of the continent.
That is why Britain must continue to maintain a leadership position in this fight.
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The entire Euro-Atlantic alliance must be unflinching in the face of Putin’s aggressionCredit: Getty
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President Trump’s tariffs on India in part show that there can be no place for Russian oilCredit: Getty
We must take the lead in mobilising sanctioned Russian sovereign assets to help Ukraine.
We must ensure our Government is using the full weight of the Whitehall legal machine to find more creative mechanisms through which those assets can be legally leveraged to support Ukraine’s military efforts.
And we must encourage all our European partners to do exactly the same.
It is clear that by leveraging our full economic might, and crippling Russia’s, we can continue to support Ukraine, and force Putin to the table.
The entire Euro-Atlantic alliance must be unflinching in the face of Putin’s aggression.
From sanctions, to Operation Interflex and the 100-year Partnership, Britain’s support for Ukraine has been unwavering and must continue to be so.
Shoulder to shoulder
So we must stand up for the territorial integrity of Ukraine and ensure that at no stage is Putin’s aggression rewarded.
Because the lesson of the past 20 years is crystal clear: Putin only comes back for more.
We must stand shoulder to shoulder with our Ukrainian friends as they fight not just an imperialist Russian, but a whole axis of authoritarian states seeking to sow destruction on our own continent.
Ukraine is in a battle for its own sovereignty as well as the principles that underpin our whole way of life — democracy, liberty and the rule of law.
Britain has a history of standing up to threatening authoritarianism.
The invasion of Ukraine demands that we do so again.
We must keep rising to the challenge.
Putin has to know that if he tests the Euro-Atlantic alliance, he will fail.
US President Donald Trump has issued an executive order hitting India with an additional 25% tariff over its purchases of Russian oil.
That will raise the total tariff on Indian imports to the United States to 50% – among the highest rates imposed by the US.
The new rate will come into effect in 21 days, so on 27 August, according to the executive order.
A response from India’s foreign ministry on Wednesday said Delhi had already made clear its stance on imports from Russia, and reiterated that the tariff is “unfair, unjustified and unreasonable”.
“It is therefore extremely unfortunate that the US should choose to impose additional tariffs on India for actions that several other countries are also taking in their own national interest,” the brief statement read.
“India will take all actions necessary to protect its national interests,” it added.
The US president had earlier warned he would raise levies, saying India doesn’t “care how many people in Ukraine are being killed by the Russian War Machine”.
On Wednesday, the White House said in a statement that the “Russian Federation’s actions in Ukraine pose an ongoing threat to US national security and foreign policy, necessitating stronger measures to address the national emergency”.
It said India’s imports of Russian oil undermine US efforts to counter Russia’s activities in Ukraine.
It added that the US will determine which other countries import oil from Russia, and will “recommend further actions to the President as needed”.
Oil and gas are Russia’s biggest exports, and Moscow’s biggest customers include China, India and Turkey.
The threatened tariff hike follows meetings on Wednesday by Trump’s top envoy Steve Witkoff in Moscow, aimed at securing peace between Russia and Ukraine.
The additional tariff would mean a steep 50% duty on key Indian exports like textiles, gems and jewellery, auto parts, and seafood, hitting major job-creating sectors.
Electronics, including iPhones, and pharma remain exempt for now.
Delhi has previously called Trump’s threat to raise tariffs over its purchase of oil from Russia “unjustified and unreasonable”.
In an earlier statement, a spokesperson for India’s foreign ministry said the US had encouraged India to import Russian gas at the start of the conflict, “for strengthening global energy markets stability”.
He said India “began importing from Russia because traditional supplies were diverted to Europe after the outbreak of the conflict”.
The latest threatened tariff demonstrates Trump’s willingness to impose sanctions related to the war in Ukraine even against nations that the US considers to be important allies or trading partners.
This could be a warning that other countries could feel a real bite if Trump ramps up those kind of sanctions once Friday’s deadline passes, when the US president has threatened new sanctions on Russia and to place 100% tariffs on countries that purchase its oil.
This would not be the first time the Trump administration has imposed secondary tariffs, which are also in place to punish buyers of Venezuelan oil.
India has previously criticised the US – its largest trading partner – for introducing the levies, when the US itself is still doing trade with Russia.
Last year, the US traded goods worth an estimated $3.5bn (£2.6bn) with Russia, despite tough sanctions and tariffs.
Trump and Indian Prime Minister Narendra Modi have in the past referred to each other as friends and, during Trump’s first term, attended political rallies in each others’ countries.
But that has not stopped Trump from hitting India with the levies, suggesting diverging interests between New Delhi and Washington.
The Federation of India Exports Organisations has called the decision to impose additional tariffs “extremely shocking”, adding that it will hit 55% of India’s exports to America.
The tariffs are expected to make Indian goods far costlier in the US, and could cut US-bound exports by 40–50%, according to the Global Trade Research Initiative (GTRI), a Delhi-based think tank.
“India should remain calm, avoid retaliation for at least six months, and recognise that meaningful trade negotiations with the US cannot proceed under threats or mistrust,” former Indian trade official and head of GTRI, Ajay Srivastava, said.
With additional analysis from BBC North America correspondent Anthony Zurcher.
India Prime Minister Narendra Modi shakes hands with U.S. President Donald Trump in the Oval Office at the White House in Washington, on Thursday, February 13, 2025. On Monday, Trump threatened India with tariffs over its buying of Russia oil. File Photo by Francis Chung/UPI | License Photo
Aug. 5 (UPI) — U.S. President Donald Trump has threatened India with increased tariffs over its purchase of Russian oil amid Moscow’s war in Ukraine.
The American president issued his threat Monday in a statement published on his Truth Social media platform, accusing Delhi of not only buying “massive amounts” of Russian oil, but selling much of it on the open market for “big profits.”
“They don’t care how many people in Ukraine are being killed by the Russian War Machine. Because of this, I will be substantially raising the tariff paid by India to the USA,” Trump said.
Trump has long seen tariffs as a tool to right trade deficits and as a bargaining tool. He has also started to use it as a punitive measure to retaliate against countries for taking actions he disagrees with.
Last week, Trump imposed a 25% tariff on India as he imposed tariffs against dozens of nations.
On Friday, the American president was asked about the situation, and said that he’s heard India was to discontinue buying Russian crude.
“That’s what I heard. I don’t know if that’s right or not, but that’s a good step,” he said to a question about the percentage of tariffs he was considering imposing on the ally.
“We’ll see what happens.
Over the weekend, India refuted the claims, stating it was not altering its policies.
In response to Trump’s threat on Monday, India accused the United States, and the European Union, of hypocrisy, saying they began importing from Russia “because traditional supplies were diverted to Europe after the outbreak of the conflict.”
“India’s imports are meant to ensure predictable and affordable energy costs to the Indian consumer. They are a necessity compelled by global market situation,” India’s foreign ministry said in a statement. “However, it is revealing that the very nations criticizing India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion.”
It said the targeting of India was both “unjustified and unreasonable.”
“Like any major economy, India will take all necessary measures to safeguard its national interests and economic security.”
India rejects criticism of its business dealings with Russia as ‘unreasonable’, vowing to safeguard its own interests.
Washington, DC – United States President Donald Trump says he will “substantially” raise tariffs on India, intensifying the row between the two countries after years of rapprochement.
Trump accused India in a social media post on Monday of buying and reselling “massive amounts” of Russian oil “for big profits”.
“They don’t care how many people in Ukraine are being killed by the Russian War Machine,” the US president wrote. “Because of this, I will be substantially raising the Tariff paid by India to the USA. Thank you for your attention to this matter!!!”
He did not specify the rate of the tariffs or when they would take effect. The US imported $87.4bn in Indian goods in 2024, according to US government data.
Last week, Trump announced 25 percent tariffs on Indian goods, citing New Delhi’s levies on US products and purchases of Russian oil and military equipment.
Later on Monday, India rejected Western criticism of its business dealings with Russia, noting that the US and European countries have continued to import Russian goods and energy products after the war.
India’s Ministry of External Affairs spokesperson Randhir Jaiswal said New Delhi’s imports “are meant to ensure predictable and affordable energy costs to the Indian consumer”.
“In this background, the targeting of India is unjustified and unreasonable,” Jaiswal said in a statement. “Like any major economy, India will take all necessary measures to safeguard its national interests and economic security.”
India and Russia’s ‘steady’ partnership
According to the US Energy Information Administration (EIA), India has been buying Russian oil at a discount since the start of the war in Ukraine in 2022, which unleashed heavy Western sanctions on Russia, including its energy sector.
India increased its purchases of Russian oil more than sixfold after the conflict broke out, an EIA report said.
On Saturday, India’s Jaiswal suggested that his country would maintain its relations with Russia despite Trump’s criticisms.
“Our bilateral relationships with various countries stand on their own merit and should not be seen from the prism of a third country,” Jaiswal told reporters. “India and Russia have a steady and time-tested partnership.”
While campaigning last year, Trump promised to bring a swift end to the war in Ukraine, but the conflict continues to rage on more than six months into his presidency.
Trump initially took a neutral approach to try to mediate an end to the war, but in recent weeks, he has been increasingly critical of Russia and has threatened further sanctions against Moscow.
On Sunday, White House envoy Steve Witkoff confirmed that he will visit Russia in the coming days for talks to end the war.
Russia invaded Ukraine in February 2022, but its initial assault to capture the capital, Kyiv, was fended off. Since then, the fighting has turned into a protracted conflict for control of the eastern part of the country.
On Sunday, top White House aide Stephen Miller accused India of “financing” Russia’s war in Ukraine.
“People will be shocked to learn that India is basically tied with China in purchasing Russian oil. That’s an astonishing fact,” Miller told Fox News.
Ukraine has regularly hit Russian oil and gas infrastructure in response to attacks on its own territory.
An overnight Ukrainian drone attack has sparked a fire at an oil depot in Sochi, the southwestern Russian resort that hosted the 2014 Winter Olympic Games, local authorities say.
The attack came a day after Ukraine’s military said it struck the Ryazan oil refinery in central Russia, causing a fire. Ukraine has regularly hit Russian oil and gas infrastructure in response to attacks on its own territory since Russia began its war in February 2022.
“Sochi suffered a drone attack by the Kyiv regime last night,” the governor of Russia’s Krasnodar region, Veniamin Kondratiev, said on the Telegram messaging application on Sunday.
Drone wreckage hit an “oil tank, which caused a fire”, Kondratiev said.
Sochi Mayor Andrei Proshunin said there were no victims and “the situation is totally under control”, adding that firefighters were extinguishing the blaze.
Air traffic was briefly suspended at Sochi’s airport but has resumed, Russia’s air transport regulator Rosaviatsia said.
Air strikes on Sochi, about 400km (250 miles) southeast of the Ukrainian border, are relatively rare compared with other Russian cities. However, Ukrainian drone attacks killed two people in the region late last month, according to local authorities.
Ukrainian officials have not commented on the fire.
Kyiv has warned it will intensify its air strikes against Russia in response to an increase in Russian attacks on its territory in recent weeks, which have killed dozens of civilians.
On Sunday, Ukraine’s air force said on Telegram that Russia had launched 76 attack drones and seven missiles targeting Ukraine overnight, striking eight locations throughout Ukraine. Ukraine’s air defence units destroyed 60 of the drones and one missile, it said.
In the front-line regions of Zaporizhia and Kherson, at least three people were killed and more than 12 injured in Russian attacks over the 24 hours into Sunday morning, regional governors said.
A Russian missile strike on the city of Mykolaiv in southern Ukraine also injured at least seven people and destroyed or damaged dozens of homes and civilian infrastructure, the regional governor said.
In the early days of the war, the Mykolaiv region stood on the front lines, facing frequent artillery strikes and aerial attacks. Even after Russian forces were pushed back in late 2022, drones and missiles have remained a constant danger there.
Russia also launched a short-lived missile attack on Kyiv overnight, but there have been no reports of injuries or damage.
In July, United States President Donald Trump said he would implement “severe tariffs” on Russia unless a peace deal is reached by early September. Last week, Trump said he would give Putin 10 to 12 days, meaning Trump wants peace efforts to make progress by Thursday to Saturday.
So far, the Kremlin has rejected the idea of a lasting ceasefire in Ukraine.
Last week, Russian President Vladimir Putin said he wanted peace but his demands for ending Moscow’s military offensive were “unchanged”.
Those demands include Ukraine abandoning some of its own territory and ending its ambitions to join NATO.
Video shows a massive explosion at a Russian oil facility in Novokuybyshevsk, 1,000km from the Ukrainian border. Ukraine’s military says it used drones to target several sites inside Russia, including refineries, an airfield, and an electronics plant.
Homes were hit in a Russian missile strike on Mykolaiv (pic: State Emergency Service of Ukraine)
A Russian missile strike has destroyed homes and civilian infrastructure in Ukraine’s southern city of Mykolaiv, local officials say.
At least three civilians were reported injured in the city near the Black Sea, which has been repeatedly shelled by Russian forces. Ukraine’s State Emergency Service posted photos of firefighters at the scene after the missile strike.
Early on Sunday a massive oil depot fire was raging near Russia’s Black Sea resort of Sochi – blamed by the Russian authorities on a Ukrainian drone attack. Sochi’s airport in the same area – Adler district – suspended flights.
Krasnodar Region Governor Veniamin Kondratyev said on Telegram that drone debris had hit a fuel tank, and 127 firefighters were tackling the blaze.
The drone attack was one of several launched by Ukraine over the weekend, targeting installations in the southern Russian cities of Ryazan, Penza and Voronezh. The governor of Voronezh said four people were injured in one drone strike.
Ukrainian President Volodymyr Zelensky called for stronger international sanctions on Russia this week after a deadly attack on Kyiv on Thursday killed at least 31 people.
More than 300 drones and eight cruise missiles were launched in the assault, Ukrainian officials said, making the attack one of the deadliest on the capital since Russia launched its full-scale invasion in February 2022.
Watch: Explosion rocks Russian oil facility in Novokuybyshevsk, Russia, on Saturday
Ukrainian drone strikes have killed at least three people and wounded two others overnight in western Russia, regional governors said, as a fire broke out at an oil refinery in central Russia after it was hit.
One woman was killed and two others wounded in an attack on an enterprise in Penza, the region’s governor, Oleg Melnichenko, wrote on Telegram on Saturday.
The second death of an elderly man happened inside a house that caught fire due to falling drone debris in the Samara region, Governor Vyacheslav Fedorishchev posted on Telegram.
In the Rostov region, a guard at an industrial facility was killed after a drone attack and a fire in one of the site’s buildings, acting Rostov Governor Yury Slyusar said. “The military repelled a massive air attack during the night,” destroying drones over seven districts, Slyusar posted on Telegram.
Meanwhile, Ukraine’s military said it struck Russia’s Ryazan oil refinery on Saturday, causing a fire on its territory.
In a statement on Telegram, the Unmanned Systems Forces also said they hit the Annanefteprodukt oil storage facility in the Voronezh region. The statement did not specify how the facilities were hit, but Ukraine’s military specialises in drone warfare, including long-range strikes.
Separately, Ukraine’s SBU intelligence agency said its drones had hit Russia’s Primorsko-Akhtarsk military airfield, which has been used to launch waves of long-range drones at targets in Ukraine.
The SBU said it also hit a factory in Penza that it said supplies Russia’s military-industrial complex with electronics.
At the start of Russia’s full-scale invasion in 2022, Ukraine had no response to Moscow’s vast long-range strike capacity but it has since built up a fleet of long-range kamikaze drones able to carry explosive warheads for many hundreds of kilometres (miles).
Russia’s Defence Ministry said in its daily report that its defence units had downed a total of 338 Ukrainian drones overnight.
In Ukraine’s central Dnipropetrovsk region, overnight Russian drone attacks also left three people wounded, Governor Serhiy Lysak wrote on Telegram. Several buildings, homes and cars were damaged, he added.
Russia’s Defence Ministry said its forces captured the village of Oleksandro-Kalynove in the Donetsk region on Saturday. Russian forces now control almost 20 percent of Ukraine in its east and south after three and a half years of the grinding war.
Kyiv, however, denies any Russian presence in the Dnipropetrovsk area.
Reporting from Moscow, Al Jazeera’s Osama Bin Javaid said that while there have been indications of a ceasefire in the past, the situation on the ground remains the same.
“As tensions escalate, it appears that diplomacy will be a possible way out,” he said, adding that the United States’s Middle East envoy Steve Witkofff, who has close relations with Russian officials, is expected in Moscow soon to negotiate a truce.
US President Donald Trump on Friday said he had ordered two nuclear submarines to be positioned in “the appropriate regions” in response to remarks from former Russian President Dmitry Medvedev about the risk of war between the nuclear-armed adversaries.
The US has been trying to negotiate a truce but so far, Kyiv and Moscow have mainly engaged in prisoner exchanges.
On Friday, Ukrainian President Volodymyr Zelenskyy said only Russia’s President Vladimir Putin could end the war and renewed his call for a meeting between the two leaders.
“Ukraine calls for moving beyond the exchange of statements and technical-level meetings to talks between leaders. The United States has proposed this. Ukraine has supported it,” he said on X.
“What is needed is Russia’s readiness,” he added.
Putin, who has consistently rejected calls for a ceasefire in the more than three-year conflict, said on Friday that he wanted peace but that his demands for ending Moscow’s military offensive were “unchanged”.
Those demands include that Ukraine abandon territory and end ambitions to join NATO.
July 31 (UPI) — The United States on Wednesday sanctioned dozens of individuals, entities and vessels accused of being an Iranian oil and petroleum shipping network, as the Trump administration continues with its so-called maximum pressure campaign targeting Tehran.
The 50 people and entities and 50 vessels blacklisted by the U.S. Treasury, along with 20 entities and 10 vessels sanctioned by the State Department on Wednesday, represent the largest punitive package against Iran since 2018, when President Donald Trump first imposed mass sanctions against Iran during his first term.
In 2018, Trump pulled the United States from a landmark multinational Obama-era accord aimed at preventing Tehran from securing a nuclear weapon, and slapped sanctions on the country as part of his maximum pressure campaign that failed to bring Iran to the negotiating table on a new deal.
Instead, Iran escalated its nuclear program to the point that the State Department remarked in 2022 that it would need as little as a week to produce enough weapons-grade highly enriched uranium for a nuclear weapon.
Trump reinstated his maximum pressure campaign on Iran in February and has been targeting its ability to generate revenue since. He also attacked three Iranian nuclear sites last month, amid Israel’s war against Iran-backed Hamas in Gaza.
The sanctions unveiled Wednesday target the vast shipping network of 49-year-old Mohammad Hossein Shamkhani that the United States accuses of laundering billions in profit from the sales of Iranian and Russian crude oil and other petroleum products to buyers mostly in China.
Hossein is the son of Ali Shamkhani, a top political advisor to Iranian leader Ayatollah Khamenei, and who was sanctioned by the United States in 2020.
“The Shamkhani family’s shipping empire highlights how the Iranian regime elites leverage their positions to accrue massive wealth and fund the regime’s dangerous behavior,” Treasury Secretary Scott Bessent said in a statement.
“These actions put America first by targeting regime elites that profit while Tehran threatens the safety of the United States.”
Bessent added on X that with Wednesday’s sanctions, the United States has sanctioned more than 500 Iranian and Iran-linked targets this year.
The announcement of sanctions comes a day after Iran’s foreign minister, Seyed Abbas Araghchi, threatened to retaliate against any new threats to its nuclear program.
“If aggression is repeated, we will not hesitate to react in a more decisive manner and in a way that will be IMPOSSIBLE to cover up,” he said on X on Monday.
Trump claimed his strikes “obliterated” Iran’s nuclear program, while others have questioned the severity of the damage.
Corporate and investment banking revenues in the Gulf are burgeoning as lenders underwrite the region’s economic transformation.
Lenders like what they are hearing from Gulf region businesses. Corporate and investment banking (CIB), which already accounted for more than half of total banking revenues in the Gulf Cooperation Council (GCC), is expanding at an annual rate of 14%, more than twice the regional average, according to a recent McKinsey study. Lenders expect CIB revenues to reach the $100 billion mark by 2030 as the region deepens its economic transformation.
“All GCC nations are actively working to diversify their economies away from hydrocarbon dependence, which will unlock significant growth opportunities in all sectors,” says Wissam Haddad, CEO of Riyadh-based SICO Capital, which is developing products and services geared toward emerging technologies.
From Saudi Arabia’s Vision 2030 blueprint to the United Arab Emirates’ digital and green ambitions, Gulf countries have embarked on multi-billion-dollar quests to reshape their economies. Countless initiatives across the board are boosting demand for complex financing solutions and banking services. “As governments prioritize large-scale infrastructure, energy transition, and technology-led growth, financial institutions are playing an increasingly strategic role,” says Abbas Husain, global head of Infrastructure and Development Finance at Standard Chartered. “In this environment, financing needs are becoming more sophisticated. There is growing interest in integrated capital solutions that combine bank lending with broader access to capital.” The Gulf ’s CIB client base is broad: from sovereign wealth funds and government-related entities to multinational firms entering the region, high-net-worth individuals, institutional investors, publicly listed companies, and small to midsized enterprises.
“In this environment, financing needs are becoming more sophisticated.”
Abbas Husain, Global Head of Infrastructure and Development Finance, Standard Chartered
“Many are deeply involved in executing national transformation agendas and are at the forefront of innovation, sustainability, and infrastructure development,” Husain notes. “What they increasingly have in common is the need for integrated, forward-looking financial solutions that support complex, multi-market strategies. This extends across debt financing, risk management, and strategic advisory, often with a strong cross-border dimension.”
Capital Markets
As the GCC economies evolve, so too are their capital markets, spanning debt issuance, equity offerings, and M&A, all of which are contributing to the sharp rise in CIB revenues. In the first quarter of 2025, M&A activity surged 66%, to reach $46 billion over 225 transactions, reports Ernst & Young, with the UAE accounting for more than half of all announced deals. The UAE and Saudi Arabian IPO markets have recorded steady growth of 10% to 15% year-on-year over the past decade.
Karim Shoeib, Group CEO, Investment Banking, Al Ramz
“The surge in IPO activity, particularly in the UAE, is creating significant momentum,” says Karim Shoeib, group CEO, Investment Banking, at Al Ramz, a Dubai-based public joint-stock company. “Government-led privatizations and family business listings are expanding the investable universe and generating new opportunities for both institutional and retail clients.” Although the UAE and Saudi Arabia dominate market activity, he advises that investors keep an eye on other countries including Oman and Bahrain, where Al Ramz was recently licensed.
With family-owned businesses making up much of the private sector—around 90% in the UAE and 60% in Saudi Arabia—family listings look to be an important catalyst for capital market activity. The region is on the brink of an unprecedented generational wealth transfer; by 2030, over $1 trillion in assets is forecast to change hands, opening rare opportunities for investors to become shareholders of some of the region’s crown jewels.
A high-profile example is Emirati retail giant Majid Al Futtaim. Following the founder’s death without a will in 2021, years of internal disputes may culminate in an IPO.
“The region is witnessing an increasing number of company listings, strategic projects, a growing preference for more advanced and hybrid debt products, and continued consolidation,” says Haddad, “particularly in fragmented sectors such as hospitality and insurance. Many GCC countries have solid long-term strategic visions that emphasize sectoral diversification and privatization, which we believe will continue to drive robust demand for CIB services.”
Attracting Global Banks
Global financial institutions are ramping up their presence in the GCC. BNY Mellon recently established its regional headquarters in Riyadh, following Goldman Sachs and Citigroup, which were licensed last year.
US private equity firm I Squared Capital has committed $1 billion to Saudi infrastructure projects while Azura, a Monaco-based wealth management firm overseeing $5 billion in assets, is relocating its operations to Abu Dhabi. UBS also is set to open an office in the UAE capital and JPMorgan plans to hire over 100 additional staff to strengthen its already sizable Middle East presence.
“This is healthy and a reflection of the strong fundamentals and future potential of local markets,” Shoeib notes. “We view this development as a natural part of a maturing financial ecosys- tem that continues to evolve in both scale and sophistication.”
Regional banks retain key advantages, including deep client relationships, intimate knowledge of local regulatory environ- ments, and cultural proximity in areas like Islamic finance, but global entrants bring expansive balance sheets and often more advanced digital infrastructure.
Although the presence of global banks intensifies competition, “it also raises industry standards, introduces global best practices, and attracts deeper pools of capital to the region,” notes Haddad. “In many ways, international interest complements our efforts,” he adds, “broadening market participation and expanding the ecosystem rather than threatening it.”
Still, success for local players will demand more than just local familiarity and competitive products.
“To truly succeed in this environment, it is no longer sufficient to be just a source of liquidity,” says Husain, citing his clients’ interest in sustainable finance, digital transformation, and long-term capital structuring. “What differentiates institutions is the ability to offer holistic solutions grounded in local understanding and global reach. Deep relationships, consistent presence, and a track record of delivery are critical. What clients value is a strategic partner that can support them across their full lifecycle, from advisory through to execution and long-term financing.”
Challenges Ahead
Despite strong momentum, the GCC’s CIB sector faces significant headwinds. Geopolitical tensions, oil price volatility, new corporate tax regimes, and rising interest rates weigh on the cost of capital, dampening investor appetite and affecting deal execution timelines.
“Broader geopolitical tensions and global economic shifts, such as inflationary pressures and interest rate cycles, continue to shape investor sentiment across the region,” says Shoeib. “With GCC currencies pegged to the US dollar, navigating these macroeconomic dynamics requires agility and a steady focus on long-term value creation.”
Another structural challenge concerns the availability of qualified human capital and the sector’s ability to keep pace with rapid technological innovation, including generative AI. “The future of corporate and investment banking in the GCC will be shaped by those who can align innovation with execution and combine global connectivity with a strong understanding of regional ambition,” says Husain.
“Financial institutions that can operate across jurisdictions, connect global capital to local opportunity, and provide clarity in a complex landscape are well positioned to lead.” Concurrently, the GCC’s rising capital needs are putting pressure on liquidity. In most countries, credit demand is now outpacing deposit growth, driving loan-to-deposit ratios to historic highs. In Saudi Arabia, the ratio exceeds 100%, with private-sector lending projected to grow by 12% to 14% annually, while deposits are expected to rise by only 8% to 10%. This dynamic creates both opportunities and risks for regional lenders.
“CIBs must overcome funding shortages with record-high loan-to-deposit ratios—nearing or surpassing 100% in half of all GCC countries—which create potential liquidity constraints,” the recent McKinsey study concludes. “In addition, lower interest rates, with more cuts expected this year, are putting pressure on returns, given that approximately 85% of GCC banks’ income is based on interest.”
To maintain growth and profitability, Gulf-based banks will need to adapt. “Success requires banks to consider adjustments that may help them capture opportunities, remain competitive, and maintain recent momentum,” McKinsey argues, suggesting that local players focus on improving cost efficiency, diversify their loan portfolios, deepen their footprint in capital markets and trading, and expand transaction banking and foreign exchange services.
European Union says move amounts to one of the strongest sanctions packages against Russia to date linked to the war.
The European Union has approved a new raft of stiff sanctions against Russia over its war in Ukraine, including a lower oil price cap, a ban on transactions with Nord Stream gas pipelines, and the targeting of more shadow fleet ships.
“The message is clear: Europe will not back down in its support for Ukraine. The EU will keep raising the pressure until Russia ends its war,” EU foreign policy chief Kaja Kallas said in a statement on Friday.
Kallas said the EU move amounts to “one of its strongest sanctions packages against Russia to date” linked to the war, which is now in its fourth year.
Ukraine’s newly appointed Prime Minister Yulia Svyrydenko welcomed the EU’s agreement on an 18th sanctions package against Russia, saying it “strengthens the pressure where it counts”. Svyrydenko added on X that there was more to be done in terms of measures to help bring peace closer.
French President Emmanuel Macron said that he spoke with Ukrainian leader Volodymyr Zelenskyy and added he also welcomed the adoption of the sanctions. “The Russian attacks must stop immediately,” he wrote in a post on social media platform X. “France is and remains at Ukraine’s side.”
Meanwhile, German Chancellor Friedrich Merz said that the bloc is “keeping up the pressure on Russia” following the announcement. “It’s good that we in the EU have now agreed on the 18th sanctions package against Russia,” Merz wrote on X.
“It targets banks, energy and the military industry. This weakens Russia’s ability to continue financing the war against Ukraine,” he added.
Kremlin spokesman Dmitry Peskov said on Friday that Russia has built up an immunity to Western sanctions and adapted to them. Peskov also called the sanctions illegal, saying every new restriction creates negative consequences for those countries that back them.
The move comes as European countries start to buy United States weapons for Ukraine to help the country better defend itself.
US President Donald Trump announced the deal to supply more weapons to Ukraine and threatened earlier this week to impose steep tariffs on Russia unless a peace deal is reached within 50 days.
The European Commission, the EU’s executive branch, had proposed to lower the oil price cap from $60 to $45, which is lower than the market price, to target Russia’s vast energy revenues.
The EU had hoped to get major international powers in the Group of Seven countries involved in the price cap to broaden the effect, but conflict in the Middle East pushed up oil prices, and the US administration could not be brought on board.
In 2023, Ukraine’s Western allies limited sales of Russian oil to $60 per barrel, but the price cap was largely symbolic as most of Moscow’s crude – its main moneymaker – cost less than that. Still, the cap was there in case oil prices rose.
Oil is Russia’s main source of income
The linchpin of Russia’s economy is oil income, allowing President Vladimir Putin to pour money into the armed forces without worsening inflation for people, and avoiding a currency collapse.
The EU has also targeted the Nord Stream pipelines between Russia and Germany to prevent Putin from generating any revenue from them in future, notably by discouraging would-be investors. Russian energy giant Rosneft’s refinery in India was hit, as well.
The pipelines were built to carry Russian natural gas to Germany but are not in operation. They were targeted by sabotage in 2022, but the source of the underwater explosions has remained a major international mystery.
Additionally, the new EU sanctions are targeting Russia’s banking sector to limit the Kremlin’s ability to raise funds or carry out financial transactions. Two Chinese banks were added to the list.
The EU has slapped several rounds of sanctions on Russia since Putin ordered the invasion of Ukraine on February 24, 2022.
But each round of sanctions is getting harder to agree on, as measures targeting Russia bite the economies of the 27 member nations. Slovakia held up the latest package over concerns about proposals to stop Russian gas supplies, which it relies on.
Energy Secretary Chris Wright at the U.S. Capitol in Washington, D.C. (pictured in May), said, “Investing in American energy enables energy independence and truly unleashes America’s ability to serve as the world leader in global energy.” File File Photo by Bonnie Cash/UPI | License Photo
July 11 (UPI) — The U.S. Department of Energy announced Friday it has approved an exchange from the Strategic Petroleum Reserve, or SPR, with the ExxonMobil Corp. to ease issues that affect crude oil deliveries to the company’s Baton Rouge, La., refinery.
According to a press release from the DOE, U.S. Secretary of Energy Chris Wright sanctioned the move to help keep the regional supply of transportation fuels across Louisiana and the broader Gulf Coast stable. The DOE says this will also keep the SPR’s operational flexibility as is and won’t either impact or delay the Department’s continuing efforts toward refilling the reserve.
The agreement will provide up to one million barrels of crude oil from the SPR to ExxonMobil to support the restoration of refinery operations that had been diminished due to an offshore supply disruption. The release states that ExxonMobil will eventually return the borrowed oil, as well as an unannounced amount of additional barrels of crude to the SPR at no cost to taxpayers.
Under the exchange agreement, DOE will provide up to 1 million barrels of crude oil from the SPR. The exchange will support ExxonMobil’s restoration of refinery operations that were reduced due to an offshore supply disruption. ExxonMobil will return the borrowed crude along with additional barrels of crude oil for the SPR at no cost to the taxpayer.
“Investing in American energy enables energy independence and truly unleashes America’s ability to serve as the world leader in global energy,” Wright said in an X post Friday.
July 8 (UPI) — The U.S. Department of the Interior on Tuesday took steps to make it easier for oil and gas companies to “commingle” multiple U.S. onshore drilling lease applications.
The proposed updates to oil and gas regulations in DOI’s Bureau of Land Management would allow gas and oil company operators to combine, or commingle, multiple federal leases as a means to boost productivity and, the department added, to “better reflect modern industry practices.”
“This is about common sense and catching up with today’s technology,” said Interior Secretary Doug Burgum.
The move is a facet to U.S. President Donald Trump‘s recently passed tax and spending law to permit production via different leases, often under different ownership, and using the same well pad, which is the the cleared site where production facilities operate.
“Commingling” is an industry term to define the intentional or unintentional blending of fuels either to mix similar products together for transport and storage, or to create a newer product with specific characteristics.
Currently, the bureau restricts commingling to leases only with identical mineral ownership, royalty rates and revenue distribution.
The proposed policy switch has a July 15 effective date, barring no unforeseen issues, and overwhelmingly favors corporate interests.
Burgum says the current rules were written “for a different era.”
The administration said the proposed commingling of applications would reduce environmental effects, lower operating costs and increase corporate efficiency.
“These updates will help us manage public resources more efficiently, support responsible energy production, and make sure taxpayers and tribes get every dollar they’re owed,” Burgum continued in a statement.
The department argues it will unlock “energy potential that is currently tied up in regulatory red tape,” and further claimed it could result in nearly $2 billion in annual savings for the oil and gad industry.
Federal regulators for decades treated separate reservoirs with slightly drilling pressures as different reservoirs. The redundancy cost companies about $1.8 billion in avoidable annual costs, which was the same figure cited by DOI as corporate savings.
DOI officials went on to state how those savings could give corporate entities the ability to reinvest in new energy production which, officials added, would help “drive domestic energy development while reducing the need” for a company to invest in extra equipment.
The changes in federal rules could result in a 10% spike in production and over 100,000 extra barrels per day added to American output, Energy Department officials said.
On Tuesday, the administration said the Bureau of Land Management plans to “move quickly” to update the proposed federal regulations after a period of public comment and before the July 15 start date of the new policy.
California is a state of contradictions. We lead the nation in environmental regulation, tout our clean energy goals with pride and champion a rapid transition away from fossil fuels. Yet despite this green image, our economy — and daily life — still very much run on oil and gas.
Fossil fuels account for roughly 8% of California’s $3 trillion economy — but that’s the first 8%. “If you don’t get that first 8%,” I tell my students, “You don’t get the rest of our economy.” Oil powers everything from trucks to tractors to construction equipment. Without it, you can’t build roads or bridges or get goods to grocery stores. Without refined petroleum products, you don’t make cement, steel, plastics or even the lithium-ion batteries in electric vehicles.
Despite these realities, California energy policy is leading to the dismantling of the critical infrastructure that supports this essential system. Our state has lost more than 30 refineries in the last few decades. We are now down to just nine major gasoline-producing facilities, and two more are scheduled to close in the coming months, Phillips 66 in Los Angeles and Valero in the Bay Area. Those two plants represent 284,000 barrels of daily production and account for nearly 18% of the state’s total refining capacity.
California sits atop one of the largest untapped reserves in the world, the Monterey Shale. But because of policy and regulation, we import most of our oil — including from Iraq, Saudi Arabia, Brazil, Guyana and Ecuador. California has also imported oil from Russia and Venezuela. Ironically, we have among the world’s cleanest refining standards, but we import fuel from places with lower environmental and labor protections.
All of this is enabled by a supply chain that’s more vulnerable than most realize. We have no major pipelines bringing oil to California. We rely on ships — many from Asia — that take 30 to 40 days to deliver fuel. These foreign tankers pollute at staggering rates. Stunningly, because that pollution happens over international waters, it doesn’t get counted by the California Air Resources Board. Closing a refinery in California and importing more fuel causes a net increase in pollution. And adding to our reliance on foreign oil is risky when global instability is rising.
This isn’t just a self-inflicted energy crisis in the making. It’s also a national security issue.
Military bases in California, Nevada and Arizona depend heavily on in-state refineries for specialized aviation fuel and other petroleum products essential to operations. As refineries shut down, the supply chain narrows, increasing reliance on imports from Asia and elsewhere. These gaps create unacceptable logistical and strategic risks for U.S. military readiness in the western states.
And remember, there are estimated to be hundreds of millions of barrels of accessible oil under our feet. Yet we’ve built an energy model that depends on importing foreign oil and, now, a growing dependency on foreign-supplied gasoline.
This isn’t just unsustainable. It’s also borderline irresponsible.
California’s energy transition is inevitable — but how we get there matters. We can’t pretend fossil fuels are already gone. We still need them for the economy, for mobility, for national security and for the working people who can’t afford a $60,000 electric vehicle or a solar roof.
We have the tools, talent and resources to lead a responsible energy transition, one that leverages our in-state production, balances environmental stewardship with economic pragmatism and protects our most vulnerable communities along the way.
But we have to be honest about where we are. And right now, fossil fuels still power the Golden State.
Especially because of coming refinery rules and a new tax taking effect in July, Californians are set to pay the highest gas prices in the nation. Our prices are inflated by a web of taxes, fees and boutique regulations that has grown thicker and more expensive over time. Even if oil dropped to $0 per barrel and refining were free, Californians would still be paying about $1.82 a gallon at the pump — $1.64 of that from state taxes and fees, plus 18 cents in federal gas tax.
According to CalTrans, Californians drive about 1,200 miles a month. If you’re a working-class Californian and gas goes up 50 cents per gallon, that adds about $500 in annual fuel costs. And because you pay for that with after-tax dollars, you’d need to earn at least an extra $750 just to cover it.
That matters to a construction worker commuting 60 miles a day in a pickup truck. It matters to a single mom cleaning homes across the city or a physical therapist driving to house calls. Most of these people can’t easily trade in their vehicles for Teslas and dodge gasoline hikes. Consumer analysis as noted in CalMatters indicates that the majority of EVs are bought by higher-income Californians living in areas such as Atherton, Palo Alto, Sunnyvale and Mountain View.
The people hit hardest by rising gasoline prices are the ones least able to afford alternatives. For most Californians, there is no viable mass transit available. People are just stuck spending more and more of their income on the gas-powered vehicles their lives depend on. Our state’s policies punish people for not being able to adapt quickly enough to a green future that’s not yet built. It’s a regressive tax masquerading as environmental action.
Until California realistically bridges the gap between aspirational climate goals and equitable policy execution, the state’s lofty environmental vision will continue to rest uneasily on the shoulders of its most vulnerable.
The new state excise tax adding about 2 cents a gallon went into effect July 1, and CARB is pushing for a new low-carbon fuel standard that could add and potentially major costs to the prices of gasoline and diesel fuel. No one knows exactly how much — not even the board proposing the rules.
At a recent Assembly oversight hearing, CARB officials were asked if they analyzed their regulations for consumer impacts. Their answer: We don’t calculate that. The room went silent. It was a stunning admission — regulators pushing policy without running the math.
No wonder we’re seeing an exodus of working families. By layering new and unclear costs on top of an already overstretched system, CARB and other regulators are creating what could become a self-inflicted economic shock.
And for what? Not environmental progress. California will be forced to source more and more fuel from overseas — at greater environmental and economic cost. By relying on polluting sources and carbon-intensive shipping, we’ve simply outsourced our emissions to other countries. California is not reducing emissions. We are exporting them.
If this sounds reckless, it is. But more than that, it’s unjust.
These policies are not burdening the wealthy. They’re crushing the working class. They’re forcing families to choose between gas and groceries, between job access and housing stability. They’re also outsourcing jobs overseas.
And they’re being implemented by unelected bureaucrats who, by their own admission in testimony before California lawmakers, haven’t calculated the real-world impact.
The people of California deserve better than this. They deserve honesty, transparency and policy grounded in economic realism, not ideological fantasy and environmental dogma. If recent and coming changes become a tipping point, it won’t be because of some unpredictable global event. It will be because we chose not to look before we leaped.
The path forward demands a pause, a recalibration and a return to common sense. Otherwise, this summer could mark not just another price hike — but the day we began losing control of our energy future.
Michael A. Mische is an associate professor at USC’s Marshall School of Business. A former KPMG principal, he is the author of eight books on business and strategy.
A gas flame is seen in the desert at Khurais oil field, about 100 miles from Riyadh, Saudi Arabia. File photo by Ali Haider/EPA
July 5 (UPI) — Eight OPEC+ nations on Saturday agreed to increase their crude oil production by 548,000 barrels per day starting in August.
Of the dozen Organization of Petroleum Exporting Countries, five voted to increase the output: Saudi Arabia, Algeria, Iraq, Kuwait, United Arab Emirates. There are 10 subset members with Russia, Kazakhstan and Oman joining the member nations in boosting production.
OPEC nations not voting to increase output are Iran, Venezuela, Congo, Equatorial Guinea, Gabon, Libya, Nigeria.
The increase represents half of a percent of the worldwide production.
In April, the group increased production by 411,000 barrels a day. Also, there were changes in November 2023.
The nations said the change was based on “a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories.” It also was in accordance with a decision on Dec. 5 to start a gradual and flexible return of the 2.2 million barrels per day starting April 1.
They said the “increases may be paused or reversed subject to evolving market conditions. This flexibility will allow the group to continue to support oil market stability.”
The two largest oil producers are Saudi Arabia at 9.8 million barrels per day in August and Russia at 9.3 million. Iraq is third at 4.1 million.
The United States, which is not a member of OPEC, produced an average of 13.4 million barrels of crude oil a day in August 2024, according to the U.S. Energy Information Administration.
Global Commodity Insights, a research firm, has said it expected supply would outpace demand by 1.25 million barrels a day in the second half of this year. These changes come amid the summer driving season and more oil for air conditioning amid heat waves in many places around the world.
The eight OPEC+ countries will next meet on Aug. 3 to decide on September production levels.
The Saudis have been seeking to boost production to please U.S. President Donald Trump, who has fostered a strong relationship with Saudi Arabia and UAE, The New York Times reported analysts as saying.
On Friday, August West Texas Intermediate oil futures settled at $68.30 per barrel, a decline of 50 cents. It dropped to $57.13 on May 13, which was the lowest since January 2021. The rose to $80.04 on Jan. 15 with it hitting $120.67 in June 2022.
The Adam Marine 12 was being transported to a new location when it capsized, leaving 22 injured.
An oil-drilling barge has sunk in the Gulf of Suez, killing at least four crew members and leaving four others unaccounted for.
The Egyptian government said on Wednesday that 22 people were injured when the Adam Marine 12 sank the previous night in the Gebel el-Zeit area in the Gulf of Suez.
The barge was being towed to a new location when it capsized, Egyptian media reported.
Four of the injured people were airlifted to hospital, with 18 others transported by ambulance, Egypt’s Ministry of Health said on social media.
The Ministry of Petroleum and Mineral Resources posted pictures of Minister Karim Badawi visiting survivors in El Gouna hospital in Hurghada on Wednesday, accompanied by Labour Minister Mohammed Jibran and Red Sea Governor Amr Hanafi.
Hanafi said ships from the Egyptian navy joined the search-and-rescue efforts for the missing crewmen.
Gebel el-Zeit is a major Egyptian oil production site about 300km (186 miles) south of the Suez Canal.
Asia’s dependence on Middle East oil and gas — and its relatively slow shift to clean energy — make it vulnerable to disruptions in shipments through the Strait of Hormuz, a strategic weakness highlighted by the war between Israel and Iran.
Iran sits on the strait, which handles about 20% of shipments of the world’s oil and liquefied natural gas, or LNG. Four countries — China, India, Japan and South Korea — account for 75% of those imports.
Japan and South Korea face the highest risk, according to analysis by the research group Zero Carbon Analytics, followed by India and China. All have been slow to scale up use of renewable energy.
In 2023, renewables made up just 9% of South Korea’s power mix, well below the 33% average among other members of the Organization for Economic Cooperation and Development, or OECD. In the same year, Japan relied more heavily on fossil fuels than any other country in the Group of Seven, or G7.
A truce in the 12-day Israel-Iran war appears to be holding at the time of writing, reducing the potential for trouble for now. But experts say the only way to counter lingering uncertainty is to scale back reliance on imported fossil fuels and accelerate Asia’s shift to clean, domestic energy sources.
“These are very real risks that countries should be alive to — and should be thinking about in terms of their energy and economic security,” said Murray Worthy, a research analyst at Zero Carbon Analytics.
Japan and South Korea are vulnerable
China and India are the biggest buyers of oil and LNG passing through the potential chokepoint at the Strait of Hormuz, but Japan and South Korea are more vulnerable.
Japan depends on imported fossil fuels for 87% of its total energy use and South Korea imports 81%. China relies on only 20% and India 35%, according to Ember, an independent global energy think tank that promotes clean energy.
“When you bring that together — the share of energy coming through the strait and how much oil and gas they rely on — that’s where you see Japan really rise to the top in terms of vulnerability,” said Worthy.
Three-quarters of Japan’s oil imports and more than 70% of South Korea’s oil imports — along with a fifth of its LNG — pass through the strait, said Sam Reynolds of the Institute for Energy Economics and Financial Analysis.
Both countries have focused more on diversifying fossil fuel sources than on shifting to clean energy.
Japan still plans to get 30-40% of its energy from fossil fuels by 2040. It’s building new LNG plants and replacing old ones. South Korea plans to get 25.1% of its electricity from LNG by 2030, down from 28% today, and reduce it further to 10.6% by 2038.
To meet their 2050 targets for net-zero carbon emissions, both countries must dramatically ramp up use of solar and wind power. That means adding about 9 gigawatts of solar power each year through 2030, according to the thinktank Agora Energiewende. Japan also needs an extra 5 gigawatts of wind annually, and South Korea about 6 gigawatts.
Japan’s energy policies are inconsistent. It still subsidises gasoline and diesel, aims to increase its LNG imports and supports oil and gas projects overseas. Offshore wind is hampered by regulatory barriers. Japan has climate goals, but hasn’t set firm deadlines for cutting power industry emissions.
“Has Japan done enough? No, they haven’t. And what they do is not really the best,” said Tim Daiss, at the APAC Energy Consultancy, citing Japan’s program to increase use of hydrogen fuel made from natural gas.
South Korea’s low electricity rates hinder the profitability of solar and wind projects, discouraging investment, a “key factor” limiting renewables, said Kwanghee Yeom of Agora Energiewende. He said fair pricing, stronger policy support and other reforms would help speed up adoption of clean energy.
China and India have done more — but gaps remain
China and India have moved to shield themselves from shocks linked to changing global energy prices or trade disruptions.
China led global growth in wind and solar in 2024 and generating capacity rose 45% and 18%, respectively. It has also boosted domestic gas output even as its reserves have dwindled.
By making more electricity at home from clean sources and producing more gas domestically, China has managed to reduce imports of LNG, though it still is the world’s largest oil importer, with about half of the more than 11 million barrels per day that it brings in coming from the Middle East. Russia and Malaysia are other major suppliers.
India relies heavily on coal and aims to boost coal production by around 42% from now to 2030. But its use of renewables is growing faster, with 30 additional gigawatts of clean power coming online last year, enough to power nearly 18 million Indian homes.
By diversifying its suppliers with more imports from the US, Russia and other countries in the Middle East, it has somewhat reduced its risk, said Vibhuti Garg of the Institute for Energy Economics and Financial Analysis.
“But India still needs a huge push on renewables if it wants to be truly energy secure,” she said.
Risks for the rest of Asia
A blockade of the Strait of Hormuz could affect other Asian countries and building up their renewable power generating capacity will be a “crucial hedge” against the volatility intrinsic to importing oil and gas, said Reynolds of the Institute for Energy Economics and Financial Analysis.
Southeast Asia has become a net oil importer as demand in Malaysia and Indonesia has outstripped supplies, according to the ASEAN Centre for Energy in Jakarta, Indonesia. The 10-nation Association of Southeast Asian Nations still exports more LNG than it imports due to production by Brunei, Indonesia, Malaysia, and Myanmar. But rising demand means the region will become a net LNG importer by 2032, according to consulting firm Wood Mackenzie.
Use of renewable energy is not keeping up with rising demand and production of oil and gas is faltering as older fields run dry.
The International Energy Agency has warned that ASEAN’s oil import costs could rise from $130 billion in 2024 to over $200bn by 2050 if stronger clean energy policies are not enacted.
“Clean energy is not just an imperative for the climate — it’s an imperative for national energy security,” said Reynolds.
On Friday, the price of Brent crude oil, the international benchmark, was up 0.55% on the day at $68.10 a barrel. Over the month, the fuel has risen by 6.26% in value, although prices have pulled back from last week’s peak.
