Navigating change
“What is now proved was once only imagined.”— William Blake
This week’s developments show how closely global markets, energy security, technological innovation and Europe’s economic future are connected. From record airline profits and a new open-weight AI model to the EU’s electrification ambitions and IMF warnings on growth and oil-market resilience, these are the stories shaping the week.
1.The oil shock was absorbed—but the cushion is thinning
The disruption affecting the Strait of Hormuz removed approximately 20 million barrels of oil and refined products per day from normal supply routes. Nevertheless, oil prices remained lower than initially feared because several factors helped absorb the shock: weaker demand, increased production outside the Gulf and substantial withdrawals from commercial and strategic inventories.
This apparent resilience should not create a false sense of security. By the end of May, more than 1.1 billion barrels of crude had failed to reach the market, while spare capacity and existing reserves had already been heavily used. According to the IMF, the global economy would therefore face the next disruption from a considerably weaker starting position.
The policy lesson extends beyond the immediate crisis. Governments need to rebuild inventories, diversify transport routes and accelerate the development of alternative energy sources, including renewables. Consumer support should remain targeted and temporary so that public budgets are protected while incentives for efficiency and energy savings remain in place.
2. Euro area at a crossroads: Slower growth, harder choices
The United States carried out a new round of strikes against Iran, targeting more than 80 sites, including air-defence systems, command networks, coastal radar facilities, anti-ship missile capabilities and over 60 vessels associated with Iran’s Islamic Revolutionary Guard Corps. Washington said the operation aimed to reduce Iran’s ability to threaten international commercial shipping through the Strait of Hormuz. The action followed attacks on three tankers and the US decision to revoke a licence that had allowed Iran to sell oil.
Iran condemned the strikes and warned that it would respond, further weakening the fragile ceasefire and increasing the possibility of a broader regional escalation. The Strait of Hormuz remains particularly important because disruption to this major international trade and energy route could affect oil supplies, transport costs and global markets. The latest developments therefore represent not only a serious security concern but also an economic risk, with potential consequences for energy prices, inflation and supply chains in Europe and other regions.
3. Europe plugs into a more independent future
The European Commission’s new Electrification Action Plan aims to increase electricity’s share of EU energy consumption from 23% today to 46% by 2040. If achieved, the transition could reduce Europe’s fossil-fuel imports by approximately €260 billion annually while strengthening its energy security, competitiveness and strategic independence.
The plan promotes greater use of electricity-based technologies across industry, transport and buildings, including electric vehicles, heat pumps, batteries and modern industrial systems. Yet reaching the target will require much more than adopting new technologies. Europe must narrow the price gap between electricity and fossil fuels, expand and modernise its grids, speed up connections, improve access to financing and develop the necessary workforce.
Electrification is therefore both a climate policy and an economic strategy. Its success will depend on effective implementation across Member States and on ensuring that the transition remains affordable for households and competitive for European businesses.
4. An inkling of what comes next in AI
Mira Murati’s Thinking Machines Lab has entered the increasingly competitive AI model landscape with Inkling, a 975-billion-parameter open-weight model capable of processing text, audio and video. The model is designed for tasks including advanced reasoning and coding, and researchers and companies can download, modify and adapt it to their specific needs.
Although Thinking Machines does not position Inkling as the strongest model across all major benchmarks, its strategic importance lies in its openness and adaptability. The release reflects a broader shift in the AI sector—from competition based primarily on model size and benchmark results toward models that organisations can customise using their own data and requirements.
For businesses and researchers, open-weight models may reduce dependence on a small number of proprietary providers and create more opportunities for specialised applications. However, their use also raises questions about computing requirements, governance, safety and the organisational capacity needed to deploy them responsibly.
5.Record profits, rising turbulence
The world’s nine most profitable airlines generated a combined $25.11 billion in net earnings, with Emirates retaining the leading position. These results demonstrate the strength of global travel demand and the ability of major carriers to rebuild profitability after several challenging years.
However, the figures are also backward-looking, reflecting performance largely recorded before the conflict involving Iran disrupted regional airspace, flight routes and fuel markets. The situation illustrates how quickly geopolitical developments can alter even the strongest business outlook. Higher fuel prices, longer routes, insurance costs and operational disruptions can place considerable pressure on airline margins.
The broader lesson is that financial strength alone does not guarantee future stability. Airlines will increasingly need diversified networks, flexible capacity, strong liquidity and effective geopolitical risk management. The next competitive advantage may therefore come not only from scale and profitability, but from the ability to adjust rapidly when global conditions change.