Macro

Crude slid toward the $60s as Trump's tariffs stoked recession fears just as eight OPEC+ producers surprised markets by nearly tripling their planned May output hike to 411,000 barrels per day. Goldman Sachs cut its December 2025 Brent and WTI forecasts to $66 and $62 and JPMorgan raised global recession odds to 60%, squeezing energy earnings from both the demand and supply side.

Trump signed four executive orders intended to quadruple US nuclear power capacity within 25 years, granting the energy secretary authority to approve advanced reactor designs, reorganizing the NRC with an 18-month deadline to act on applications, creating a pilot program to put three experimental reactors online by July 4, 2026, and invoking the Defense Production Act to secure reactor fuel. The push is driven by surging electricity demand from AI data centers, though experts called the 4x target highly unlikely and warned that weakening the independent NRC could compromise safety. Advanced-reactor startups such as Valar Atomics and Radiant Nuclear hailed the orders as a watershed moment for the industry.

Israeli attacks on Iranian nuclear and military targets killed top commanders and triggered missile exchanges, with Brent jumping the most since 2022. Markets weighed Strait of Hormuz risk while defense stocks rallied and equities proved surprisingly resilient.

Following the US bunker-buster strike on nuclear sites and Iran's telegraphed retaliation on a Qatar base, a ceasefire ended the 12-day war. Crude collapsed 7 percent as Hormuz fears evaporated, and stocks rallied to new records within days.

PJM's capacity auction for the 2026-27 delivery year cleared at the $329.17/MW-day price cap across most of its 13-state footprint, up 22% from last year's record, with total costs rising to $16.1 billion as forecast peak load grew about 5,500 MW, mainly from data centers. PJM said the result could push some retail bills up 1.5% to 5%, a windfall for generators including Constellation Energy, Vistra, Talen Energy, NRG Energy and Public Service Enterprise Group, while Exelon weighed re-entering regulated generation. Consumer advocates decried the costs and analysts warned state policymakers are weighing options to reduce or exit the PJM capacity market.

Nvidia and OpenAI announced a letter of intent under which Nvidia will invest up to $100 billion in OpenAI as it deploys at least 10 gigawatts of Nvidia systems — roughly 4 to 5 million GPUs — for next-generation AI infrastructure, with the first gigawatt arriving in H2 2026 on the Vera Rubin platform. Jensen Huang has said one gigawatt of data center capacity costs $50-60 billion, about $35 billion of it Nvidia chips and systems. Nvidia stock rose almost 4%, adding about $170 billion in market cap, while observers flagged the circularity of Nvidia funding its biggest customer. The deal sits on top of OpenAI's infrastructure work with Microsoft, Oracle, SoftBank and the Stargate project.

In the first half of 2025, solar and storage accounted for 82% of new U.S. power capacity, with 18 GW of solar installed, despite federal policies dampening investment. The Solar Energy Industries Association and Wood Mackenzie warn that anti-clean energy measures could reduce solar deployment by up to 21% by 2030, threatening grid reliability and economic competitiveness. Market demand and state-level growth, especially in red states, continue to drive the sector, but federal permitting and policy headwinds risk stalling manufacturing and private investment.

PJM's capacity auction for the 2027/28 delivery year cleared at a record $333.44/MW-day price cap — the third record in a row — and procured 145,777 MW, about 6,625 MW (roughly 6.6 GW) below its 20% reserve-margin reliability target, the first such miss in the grid operator's history. A 5,250-MW jump in forecast demand, almost entirely from data centers, drove the shortfall, which could trigger a backstop capacity procurement. Constellation Energy, Vistra and Talen Energy cleared capacity worth about $2.2 billion, $1.3 billion and $1.1 billion in revenue respectively.