By Ron Bousso

LONDON, May 7 (Reuters) - Energy Watch is a biweekly recap of the events and trends shaping global energy markets from ROI Energy Columnist Ron Bousso

The Middle East roller coaster not only continued this week – it accelerated. U.S. President Donald Trump on Sunday announced the launch of a Navy operation, “Project Freedom”, to force open the Strait of Hormuz and get hundreds of stranded ships and their crews out of the Gulf. Iran responded by striking ships and the United Arab Emirates, raising the spectre of a new round of fighting.

Yet within hours, Trump paused the operation, only to announce that a new U.S.-Iranian peace initiative was being hammered out.

As things stand, the two sides appear to be edging towards a limited, temporary agreement to halt the war. The emerging plan centres on a short-term memorandum rather than a ‌comprehensive peace deal, underscoring the deep divisions.

Yet the mere hope of any deal that could lead to the reopening of the strait moved oil prices sharply lower to under $100 a barrel on Wednesday, helping push many global stock markets to record highs.

Time will tell when, if, and how flows through Hormuz will resume. In the meantime, economic pain will mount, particularly in Asia, as countries scramble to handle the loss of over 13% of global oil supplies.

One thing is certain: the world is running out of shock absorbers as oil inventories are drawn down rapidly. That means oil prices will likely stay elevated for a long time to come no matter what happens with this latest peace deal. Read more in my latest column.

In other news:

• Shell's first-quarter profit hit its highest level in two years at $6.9 ‌billion, boosted by the strong performance of its oil trading business, the world’s largest, in the wake of the Iran war. Shell’s profits topped those of its peers, including larger U.S. rivals Exxon Mobil and Chevron, highlighting the benefits trading can offer.

• Europe's solar surge has become one of the continent's most visible energy transition success stories. But even the staunchest clean power advocates are now sensing there can be too much of a good thing, wrote ROI Energy Transition Columnist Gavin Maguire.

• This Reuters article offers great insight into how Middle Eastern oil producers have gone to great lengths to get some tankers out of the Gulf while avoiding Iranian attacks.

As ever, don’t hesitate to contact me at ron.bousso@thomsonreuters.com or follow me on LinkedIn with any questions or thoughts.

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