Authored by James Gorrie via The Epoch Times,

According to China’s Ministry of Water Resources, China has nearly one-fifth of the world’s population but only about 6 percent of global freshwater resources.

That presents planners in Beijing with a challenging problem: How to support 20 percent of humanity, more than 18 percent of global economic output, and an expanding digital economy, with a disproportionately small water resource?

Things become even more complicated because China’s most economically developed regions are not necessarily where water is most abundant.

Now, Beijing wants to build substantially more artificial intelligence (AI) computing capacity. That raises another fundamental question: Can China expand its AI infrastructure without worsening its existing water crisis?

China Is Betting Big on AI Infrastructure

Over the next five years, China is preparing to expand its nationwide AI data center infrastructure by roughly 2 trillion yuan, or $295 billion. The plan would create interconnected computing hubs and rely heavily on domestic technology suppliers.

Rystad Energy estimates China’s installed data-center capacity reached about 32 gigawatts at the end of 2025 and could rise above 60 gigawatts by 2030. Data-center electricity consumption could reach 289 terawatt-hours by 2030, more than twice 2025 levels. AI and high-performance computing are expected to drive much of that growth.

But electricity is only half the infrastructure equation. Since AI servers generate enormous amounts of heat, data centers must rely on cooling technologies that require substantial amounts of water.

What’s more, China’s existing data centers are already using a lot of it.

China’s Data Centers Already Have a Water Problem

A 2025 study published in Applied Energy provides perhaps the clearest warning.

Researchers estimated that China’s data centers consumed approximately 15.7 billion cubic meters of water in 2022, equivalent to about 2.7 percent of China’s total water consumption. Even more significant, the researchers found that 72 percent of China’s computing capacity was located in regions experiencing severe water scarcity.

The Chinese regime has been trying to move computing capacity away from the crowded eastern regions toward western provinces where electricity, particularly renewable electricity, is more readily available.

The strategy makes sense from an energy perspective, but not so much from a water supply perspective. The same study found that China’s “Eastern Data and Western Computing” strategy could increase water-footprint pressures in water-scarce western regions such as Gansu and Ningxia.

The imbalance between China’s water supply and rising cooling needs is obvious. Beijing is solving one bottleneck while creating another.

Moving Data West Doesn’t Move the Water

This is the central problem with China’s strategy. Western provinces have vast solar and wind resources and enormous areas available for data-center construction. But parts of the west are also among China’s driest regions.

That creates a fundamental trade-off because China cannot simply allocate more water to AI without hurting other key areas. Water used to cool an AI data center competes, directly or indirectly, with agricultural, industrial, municipal, and ecological needs.

Agriculture accounted for about 62 percent of China’s total water use in 2025, compared with 16 percent for industry and 15.8 percent for domestic consumption. Total national water use reached approximately 594.45 billion cubic meters. Agriculture’s dominance matters because food security is a strategic priority for Beijing.

On the flip side, China is improving efficiency. Water consumption per 10,000 yuan of GDP fell 4.5 percent in 2025, while water consumption per 10,000 yuan of industrial value-added declined 7.2 percent.

Those gains are significant, but efficiency cannot eliminate scarcity.

If AI computing grows rapidly enough, a data center can become more water-efficient even as the overall sector consumes more water.

That’s the danger.

China Is Trying to Make AI Greener

Beijing has set a goal to source 80 percent of its data-center electricity from green energy by 2030, up from 11 percent in 2023. But analysts say AI’s highly variable computing loads make it difficult to integrate data centers smoothly with renewable power systems.

The regime is also encouraging higher efficiency in data centers by improving power and water usage effectiveness. That technology can make a major difference.

The Applied Energy study found that simultaneous improvements in power efficiency, water efficiency, and electricity-grid decarbonization could reduce China’s national data-center water footprint by 51.5 percent to 58.3 percent by 2050, compared with a business-as-usual scenario.

The bad news is that these are scenarios, not guarantees.

The AI Boom Could Outrun the Efficiency Gains

China’s data-center industry is expanding as AI demand grows. The same technological advances that make AI more useful also increase demand for computing power.

Rystad Energy expects Chinese data-center electricity consumption to grow at roughly 19 percent annually between 2025 and 2030. But those efficiency improvements may not offset the water consequences of rapidly increasing computational capacity.

The result could be a familiar economic pattern of more efficient machines on the one hand, but more of those machines on the other.

This is where China’s water dilemma becomes more serious. It can reduce the amount of water required per unit of computing while still increasing total water consumption.

What Happens If Water Becomes the Bottleneck?

If water becomes scarce around major AI hubs, China could face pressure to restrict where new data centers are built. That could increase infrastructure costs and force companies to move computing capacity toward regions with better water availability.

It could also increase competition among agriculture, cities, and manufacturing and technology companies. That matters because China’s economy is already heavily dependent on water-intensive industries and food production.

China can build reservoirs, pipelines, water-transfer systems, recycling facilities, and increasingly efficient industrial infrastructure. It can force industries to meet state-directed efficiency targets. But it can’t manufacture freshwater at the scale necessary to meet the underlying demands of AI, industry, agriculture, and public use.

Water is ultimately constrained by geography and climate and could become one of the least visible but most important constraints on China’s AI expansion through the 2030s.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

As the Northern Hemisphere winter quickly approaches, Asian thermal coal prices have climbed to two-year highs and could be on the cusp of a major breakout as utilities stockpile the dirty fuel amid disruptions to natural gas and crude product markets caused by the war in Ukraine and the Strait of Hormuz disruption.

Newcastle coal futures, an Asian benchmark, are up more than 40% on the year and could surge even higher if the $150-a-ton level is sustained.

Prices on Tuesday closed at their highest levels since August 2024.

The combination of Ukraine decimating Russian refineries with drone attacks and the Strait of Hormuz disruptions to energy flows has sparked a global refining crisis that has encouraged utilities to switch from higher-priced natural gas and heating oil to cheaper alternative fuels such as coal.

Morgan Stanley analysts led by Amy Gower wrote in a note last week that the global refining crisis has made “the long-term outlook for thermal coal demand more resilient.” They raised their long-term outlook for Newcastle export prices by 4% to $125 a ton.

According to Bloomberg, China’s coal output has fallen more than 3% in the first eight months of the year after a deadly mining accident earlier this year triggered safety inspections and prolonged shutdowns. 

Wood Mackenzie analyst Hangyu Li expects more Chinese mines to get the green light to restart, but any new production would come as a lag.

“We expect more mines to gradually win approval to restart after about four months of suspension, but a quick rebound on production in the near-term is unlikely,” Li wrote in the note.

Possible relief from a harsh winter could come from above-normal temperatures forecast across Asia because of a record-breaking El Niño, which would ease heating demand. 

Authored by Alastair Crooke

As part of its “blockade-for-blockade,” “airport-for-airport” strategy, Ansarallah carried out a third attack on Riyadh International Airport on Saturday — 12 people (mostly civilians) were killed and more than 300 injured. This, in tandem with Iran’s escalating attacks on tankers, and expanding its maritime operations, immediately increases the pressures on President Trump to respond — at the precise moment when midterm elections loom.

As the military conflict between Yemen and Saudi Arabia continues, the latter has become increasingly dependent on attacks against Yemeni civilian targets — by Sept 2025, reports confirm that “nearly 15,000 civilians have been killed by direct military action, most of them in air strikes by the Saudi-led Coalition.” Yet the Yemeni armed resistance, taking its cue from Iran’s experience, sees that Saudi is infinitely more vulnerable via its energy infrastructure sitting out in the open.

If Yemen continues to strike at key Saudi economic and energy assets with precision, the consequences for Riyadh will multiply — the battlefield will increasingly become that of Saudi infrastructure destruction and pain for the West versus Yemeni civilian casualties.

This scenario could lead to major capital destruction, a sovereign debt crisis, and Riyadh forced to abandon yet more of its Vision 2030 projects on which MbS has staked the kingdom’s future.

Saudi Arabia continues to behave as though the old formulas of sectarianism, anti-Iran propaganda and an anti-Shia narrative can once again be used to maintain their pro-Western positioning. But those tired mantra have lost their effectiveness — even among large parts of the region’s Sunnis.

The situation today is fundamentally different. AnsarAllah does not represent the Twelver Shia framework that Saudi propaganda could easily portray as an “Iranian project.” AnsarAllah-governed Yemen has its own ideological framework, theological traditions, political history, and system of governance. Neither AnsarAllah nor the broader pro-Sana’a camp can simply be reduced to one sect or social class.

The AnsarAllah Yemeni landscape includes Hanafi Sunnis, Zaidis, Jaroodiya, Ismailis, and other Islamic schools, with even elements of Salafi groups existing within the broader Yemeni social structure.

In short, unless MbS capitulates to AnsarAllah demands — which it seems he is incapable of so doing — the consequences could develop into a devastating macro-economic cascade occurring within the key pivot situated at the center of the Gulf economic model; a cascade, furthermore, which, as its momentum grows, and foreign capital flees the kingdom, will bring a systemic collapse to the entire western colonial enterprise in the Gulf.

The more paradoxical element to this drama is that it is not from AnsarAllah’s attacks that MbS’ is most at risk — or from which his downfall might be precipitated. It will not come from the battlefield either. Regime change inside Saudi Arabia will come about as a result of his own hand — his compulsive quest to centralize control.

Even Edward Luttwak, known for his links to the western security state, observes that —

…the reason for [the impotence] of Saudi Arabia, in the face of the Houthi offensive, is that, for the Kingdom’s ruling family, the most deadly danger has long been a military coup d’état — such as the one which ended Iraq’s monarchy and killed every single member of its Husseini ruling family on 14 July 1958.

Against that danger, the successive heads of the Saudi ruling family have implemented the most effective remedy possible: divide and rule, not against foreign enemies, but within their own armed forces. For that reason, the different combat elements of the armed forces are geographically separated in the country’s vast territory, and commanded by different princes in charge of various parts of the ministry of defence, all of which are subordinate to the minister himself, Prince Khalid (a younger brother of Mohammed bin Salman).

MbS’ fear is that one F15 pilot, outside of the privileged Royal family Stipendiary circle, might choose to attack one of the Kingdom’s princely palaces (instead of striking at an AnsarAllah target) as a prelude to an all-out military revolt. This is no fanciful threat — an old “Saudi hand” recalled recently hearing one young Saudi officer threatening to do exactly that.

By cutting off traditional tribal patronage by which tribal leaders had expected to receive their share of the kingdom’s oil wealth; by seizing tribal lands earmarked for MbS “vanity projects”; and by actively working to reshape Saudi Arabia’s core legitimacy away from traditional tribal-religious alliances towards a nationalist, youth-driven identity centred around Vision 2030, MbS has cut away the political leverage that traditional tribal elders historically held within the Royal Court.

MBS has made many enemies through the transformation of the Kingdom not towards a nation-state, but rather toward being the property of a single family. He has concentrated immense political, economic, and security powers within his immediate branch of the family, acting as an absolute authority.

As one commentator writes —

For traditional tribal groups like the ‘Anizah, this means that policy decisions are made strictly from the top down, leaving little room for the traditional consensus-building or special autonomy that tribes historically enjoyed.

The erosion of the historic social contract has left a deep sense of economic anxiety and loss of prestige among traditional tribal structures — and among the Wahhabi religious establishment.

The result is that —

…a tribal realignment is under way. In the north and central areas, the Shammar and Anizzah desert tribes have reportedly sealed the borders to Jordan and Iraq. In the south, mountain tribes with historical kinship ties to AnsarAllah are more likely to ignore the border with Yemen than defend the crown.

And we’ll know, soon enough, whether there is any foundation to the [multiple] rumors that representatives of more than a dozen Saudi tribes have sat with IRGC representatives and floated a new political compact — a federal state with tribes receiving a share of oil and gas revenues.

It wouldn’t be surprising if there are not other tribes and clans throughout the Region (Syria, Iraq …) who have a similar smoldering resentment to that of the Saudi tribes, festering secretly away, and similarly derived from their own experience of top-down colonial exploitation.

Might the Saudi Kingdom experience a revolt against MbS? Such a possibility is not without precedent: When King Saud’s reckless governance threatened the monarchy’s survival in 1964, the family, senior princes, and the religious leadership stepped in to strip him of power and enforce his abdication.

In the event of the collapse of MbS-led al-Saud family rule, this would not only topple the Gulf colonial project, but would then initiate a scramble for a fundamental geopolitical re-alignment of the region.

The colonial “current shape” imposed upon West Asia for more than a century is at an inflection point. Everything is “up in the air.” How will President Trump react to AnsarAllah’s accelerated attacks on Saudi Arabia? Will he launch a wider war across the region by attacking Iran, Yemen or Iraq? Or will a major attack on north Yemen against Ansarallah, with Pakistani and Israeli participation, be authorised? Or might the Sistan-Baluchistan region of Iran erupt as a result of a Pakistani-CIA insertion of cross-border Balochi insurgents into Iran, potentially leading to Iranian exchanges of fire with Pakistan?

We don’t know. But it is widely understood that the region’s current shape was drawn up for other, earlier purposes — Bahrain was Persian for two centuries before 1783; Kuwait was a district of Basra until Britain drew a line of separation in 1899; the United Arab Emirates were Trucial Oman (coastal sheikhdoms under British protection, until December 1971). Qatar was a Bahraini suzerainty, then Ottoman, then British, before it became a state in 1971. Lebanon and Syria were carved out of the Ottoman ruin by France in 1920. Jordan was proclaimed a “state” by a British High Commissioner in 1921.

Luttwak forewarns that — “Ultimately… the [al-Saud] inheritors must learn to share Saudi Arabia’s vast flow of oil revenues with everybody else, or else risk losing more than just their wealth.”

Iran has just launched large-scale military exercises amid indications of a possible imminent Israeli-American escalation to come very soon.

Change seems inevitable.

Goldman energy analyst Nikhil Bhandari warned last month that a deepening refining crisis could prolong diesel and gasoline pain at the pump well into 2027. Now, the International Energy Agency is reinforcing that warning, cautioning that diesel supplies could remain tight into the second half of next year.

“The gasoil market balance will remain tight well into 2027 and is dependent on a recovery of product supply from the Middle East. Failing this, further demand reductions and the heavy economic costs these will entail may be needed to balance markets,” the IEA wrote in its Oil Market Report for October.

The report continued, “Global gasoil markets tightened counter-seasonally in 3Q26, as prolonged disruptions to Middle Eastern and Russian exports forced stock draws. Combined with much heavier-than-normal inventory declines in 2Q26, this has deprived global gasoil markets of crucial stock cover ahead of the peak winter demand season.”

In response, governments are slashing fuel taxes, subsidizing consumers, and draining strategic reserves as diesel prices hit records across the world. Those measures can cushion the immediate shock, but the IEA forecasts that “even with a rapid recovery expected in refinery throughputs into year-end, gasoil supply falls short of meeting demand in 4Q26, suggesting that the replenishment of lost inventories, outside of typical seasonal fluctuations, is unlikely before 2H27.”

The combination of Ukraine decimating Russian refineries with drone attacks and ongoing Strait of Hormuz disruptions has pushed the world into a refining crisis. If these pressures continue, they could keep the market from balancing in the first half of next year, sending prices even higher, and unleash a more brutal period of demand destruction. That means businesses and consumers cutting fuel use because prices are too high, with consequences for transport, agriculture, and industrial activity. Higher fuel prices could also feed into inflation, push government bond yields higher, and weigh on global equity markets.

With US diesel prices at the pump topping $6.50 a gallon (data via AAA) last month, the industrial fuel squeeze pushed President Trump last week toward an unlikely source of relief: Russia.

In recent days, Trump said he struck a deal with Moscow to immediately supply 300,000 metric tons of diesel to the global market, seeking to ease shortages ahead of the US midterm elections.

The Trump administration also pushed the Group of Seven wealthy democracies to release 100 million barrels of oil and fuel products in the coming weeks to cap prices ahead of the Northern Hemisphere winter.

On Tuesday, Vice President JD Vance announced that the administration would use wartime authority to increase fuel production at a refinery in Texas: “I am pleased to announce that the Trump administration, working with the refinery at Delek, has used the Defense Production Act and we’re going to expand the refinery right here in Tyler, Texas.”

“We want millions of gallons of commercial-grade and military-spec fuel to come out of this refinery, in addition to what it’s already producing,” Vance told the crowd.

Circling back to Goldman analyst Bhandari’s note on the diesel crisis, which could extend well into 2027, he gave clients three scenarios for where global product inventories could head next.

Read the report here. Also read: Goldman commodity experts Yulia Zhestkova Grigsby and Daan Struyven recently warned that the diesel crisis is setting up the next gasoline squeeze.