Hello readers, 

We’ve been quiet as we’re wrapping up recording our podcast which will be out in a few weeks. Our next essay/newsletter in Phenomenal World is out next week (for real!) and it expands on some of the themes about the domestic political strategy behind Mark Carney’s Davos speech, and what it means for the rest of the world.   

There are a million other things to write about and most of them are extremely bleak. But in this newsletter we’e restricted it to the threat if a US attack on Iran; India’s middle power-building diplomacy; and Europe’s proposed new industrial act.

Also: The London Review of Books has at last published its inaugural New York lecture from October last year; it’s Adam Tooze on electrostates and petrostates. Tim gets a big shoutout at the end.

You can email us (Kate here; Tim here); follow us on Bluesky (Kate, Tim, Polycrisis account). And do join our discord channel!

• Kate 

Again: without the bombs, please

Just over four years ago Russia invaded Ukraine and everything changed. Enemy oil and gas were restricted and energy suddenly became expensive and scarce.

It was a disaster. Within a few days, the International Energy Agency published a 10 point plan:

A 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas – Analysis - IEA

A 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas - Analysis and key findings. A report by the International Energy Agency.

Yet Europe survived. Industrial output was hurt, but not mortally (Germany has other issues such as investment in manufacturing facilities). LNG terminals were hastily built; but had an average utilization rate of 52% in the first half of 2025, as total gas demand was cut by a fifth after 2022 with clean energy taking a larger share. As Adam Tooze wrote just over a year after the Ukraine invasion, Europe’s energy crunch was “the energy crisis that wasn’t”. 

Blaming renewable energy for the harshness of the Ukraine energy shock, rather than (some of) Europe having doubled down on Russian gas and oil years earlier, is the kind of opposite-world discourse that energy transition attracts. Remember the French gilets jaune protests being, somehow, widely misunderstood as an anti-climate action movement?

***

If the US attacks Iran soon oil supplies could take a hit in any number of ways, including an Iranian strike on Gulf facilities; or a naval blockade of the all-important straits of Hormuz through which 20% of the world’s oil and LNG shipments travel. 

How would the energy effects of a strike on Iran compare to 2022, or to last month? When Venezuela’s president was captured by US forces in early January, oil prices moved very little; but a lot of Venezuela’s oil exports had already been taken out of the market and the remainder was largely sold to Chinese “teapot” refiners. Crude oil markets, though, are still believed to be at least as oversupplied as they were then. 

Oil markets are adding a geopolitical risk premium of about $7 to $10 per barrel; that’s probability-weighted, so it doesn’t reflect the magnitude of what happens to oil prices if the Hormusz actually does become closed to shipping. That’s a significant shift in oil prices; however — so if the US refrains from striking Iran, will these latest events help accelerate away from oil and LNG dependency anyway?

Around and without updates: India and Europe

India’s project of steady diversification away from the US is gathering pace. Shreyas Shende wrote for us in October about India’s shift away from more than two decades of close relations with the US, and in the past few months it has been building closer ties with Japan, Canada, Brazil, the United Arab Emirates and the EU. India championed Africa’s representation in the G20 and Modi has hosted two global south summits. Visa restrictions and flights between China have eased and India participated in last year’s Shanghai Coordination Organization meeting. From the FT:  

“India is stitching a more autonomous economic geography,” says Nirupama Rao, a former Indian foreign secretary. “It is building a lattice, not a bloc — not substituting for the US but gradually gathering shock absorbers against US unpredictability and Chinese coercion.”

Energy is a throughline in all of this. India’s imports of sanctioned Russian oil were cited by Trump as the reason for the astonishing 50% tariffs announced last year; and India had pledged to cut these imports as part of a deal to cut the tariffs to 18%. But it was unclear how much these imports would really fall, even before the Supreme Court’s ruling last week that the US IEEPA tariffs were unconstitutional. Meanwhile India is installing renewables rapidly; last year it reached its 2030 goal of having half of all electricity generation from clean energy sources five years early.

Europe

The need to quickly reduce US dependency is (now) being taken seriously in Brussels, but Europe’s wrangling over domestic manufacturing strategy illustrates how hard it is to solve for security, climate, and domestic politics. The European Commission has delayed presenting the proposed  Industrial Accelerator Act as some member states object to the “Buy European” procurement rules, and to the targets for domestic production quotas for strategic sectors like chemicals, AI, and defence. NGOs are enquiring as to whether greenness of steel and other materials will take precedence over location.

Links:

Check out Shreyas’ weekly Indialog newsletter

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