Report · Energy policy & security
Powerless in the Caribbean: Cuba’s Energy Collapse and the Fight for Economic Survival
Cuba’s fuel shortage and ageing grid threaten prolonged blackouts. The report traces the regional implications: tighter Caribbean fuel markets, with little direct effect on global oil benchmarks.
Co-authored with Benjamin Lozovsky and Michael Wu.
Full report: 6-minute read.
Summary
Cuba’s energy crisis followed the loss of the imported fuel on which its ageing power system depended. Supply from Venezuela ended after US action there in early 2026, and a US blockade in February cut off other suppliers. Domestic crude output of about 40,000 barrels a day falls well short of the roughly 100,000 the island needs. A rapid expansion of solar capacity could not realistically close the gap, and an underinvested grid would limit generation even if fuel supplies recovered.
Our base case was emergency survival, not recovery: sporadic external shipments would prevent a total grid collapse, while blackouts and weak industrial output persisted through 2026.
Key findings
The effect on markets is regional. The base case had Caribbean fuel oil and diesel premiums staying US$4–7 a barrel above seasonal averages, with a negligible direct effect on Brent.
The fuel shortage and the state of the grid are separate problems. The report notes that generation shortfalls occurred in earlier years without a fuel shortage.
The bull case had Cuba securing consistent state-backed shipments from Russia or Chinese-backed financing. In the bear case, emergency shipments failed to materialise and major thermoelectric units stayed offline.
What would change the view
Would weaken the view
- Cuba secures consistent Russian shipments or Chinese-backed financing, so fuel stocks rebuild, generation stabilises and blackouts become less frequent by early 2027.
Would move it either way
- Emergency shipments fail, major thermoelectric units stay offline and outages become prolonged multi-day grid failures. The report said this bear case would likely trigger emergency spot buying across the Caribbean, lifting regional fuel oil and diesel premiums towards US$8–12 a barrel.
Conditions as set out in the report when it was published.
Read the full report for the complete analysis.
Read the full report at 6:05 MarketsDated analysis from May 2026. Views reflect the information available at the time and have not been updated. Nothing here is investment advice.