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Hello Power Up readers,

President Donald Trump this weekend called on NATO allies and Asian countries heavily dependent on Middle East oil, including China, to take part in efforts to re-open and secure the Strait of Hormuz. At least 15% of global energy supplies are currently trapped behind this narrow waterway.

This is bound to raise questions about why the president didn't consult with more allies before launching a war in which severe disruption to energy supplies was a key risk.

As the joint Israel-US aerial war with Iran, which has quickly evolved into a regional conflict, enters its third week, it increasingly appears that the future of the Hormuz closure could determine the success of the campaign for Washington.

Britain and the European Union are considering their response to President Trump, who also warned that NATO faced a "very bad" future if it didn't step forward to offer assistance now. Japan said it had no plans to dispatch naval vessels to escort ships out of the Middle East where it gets 95% of its oil. So did Australia.

This all suggests the strait may remain closed for weeks, which could spell disaster for many economies as oil prices keep climbing above $100 a barrel.

Iran has continued to target energy infrastructure across the region in recent days. This included two strikes on the United Arab Emirates' port of Fujairah, a vital oil loading terminal outside the strait. Over the weekend, the U.S. also bombed some non-oil infrastructure on Kharg Island through which Iran exports the vast majority of its oil.

The pressure on oil- and gas-importing nations is clearly mounting, causing refined product markets in Asia to tighten severely. The global supply of jet fuel and diesel is becoming a concern after China and Thailand halted fuel exports due to the war.

This energy protectionism could eventually lead to a trade stand-off between China and Australia, which requires diesel to extract the iron ore that China heavily relies on, ROI Asia Commodities Columnist Clyde Russell explains.

Meanwhile, the United States is rapidly running out of tools to absorb the impact of the oil supply shock. More on this below.

Here are some more headlines:

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The U.S. is rapidly running out of shock absorbers to cushion the oil market from the loss of Middle Eastern crude supplies as the Iran war rages, raising the risk of a deeper global economic slowdown if demand destruction accelerates.

While the U.S. has offered financial guarantees to insure vessels against war-related losses in an effort to restart transit, most commercial shippers appear unwilling to take the risk.

In past crises, the world has typically looked to the spare production capacity held by the Organization of the Petroleum Exporting Countries and allied producers, collectively known as OPEC+. But it is not much help in this situation.

Last Thursday, Washington issued a allowing countries to buy sanctioned Russian crude oil and petroleum products currently at sea. The U.S. Treasury had already issued a similar 30‑day waiver specifically for India.

But oil prices have continued climbing.