Record Ocean Heat and El Niño Threaten Supply Chains

The world's oceans have never been this hot in June. Sea surface temperatures across tropical and temperate latitudes sit just under 21°C. Before widespread industrialisation in 1870, the average was about 19.6°C. That difference is small in absolute terms. The energy required to heat the global ocean by that much is staggering. Matthew England, a climate scientist at UNSW Sydney, said the heat added to the oceans in 2025 was the equivalent of about 12 Hiroshima-scale nuclear bombs exploding every second of every day. More than 90 percent of the extra heat trapped by greenhouse gases goes into the oceans, he and colleagues Alex Sen Gupta and Alistair Hobday reported.

A forming El Nino in the tropical Pacific is expected to be large. Sea surface temperatures across a big area of the central eastern Pacific already run about 1.24°C above average. Subsurface conditions in the eastern Pacific are more than 6°C above average. Hotter oceans fuel stronger cyclones and a more humid atmosphere, which in turn drives more intense rainfall. Parts of the Mediterranean are up to 6°C hotter than the long-term average. Parts of the North Sea are up to 3°C warmer.

For markets, the pattern carries specific risk. Typical cyclone areas such as the western Indian Ocean could see stronger cyclones dumping heavier rainfall when they hit land. El Nino tends to bring extreme rain and floods to western South America and dry conditions over parts of Australia and Southeast Asia.

Commodity supply chains that cross these regions face disruption. Harder rain events can shut mines in the Andes. Dry spells can hurt Australian wheat and canola output. Energy demand in Southeast Asia may spike if heatwaves push cooling loads higher.

Companies with manufacturing hubs in cyclone-prone zones could face production halts or logistics delays. Hon Hai Precision Industry, known as Foxconn, operates large facilities in parts of China that saw record typhoon damage in recent years. Apple's contract assemblers in southern China and South Asia face similar exposure. The stock market analysis piece on supply chain resilience provides a wider framework for tracking these risks.

The WMO El Niño Alert Pressures Southern Company's Earnings Outlook article detailed how utility demand and fuel costs shift during a strong El Nino. Southern Company's exposure to natural gas prices and cooling demand mirrors what other energy firms could face if the pattern intensifies.

England said the full effect of an El Nino on atmospheric heat becomes clearest toward the end of the cycle. That means 2026 is likely to be very hot. 2027 could be even hotter as ocean heat moves back to the surface. The same pattern played out during the 2023–24 El Nino and the 2015–16 event.

Subsurface heat in the Pacific remains elevated. The heat stored below the surface acts as fuel for continued warming even after the surface El Nino signal fades, the scientists said.

Marine heatwaves are becoming more frequent and longer. The team noted that forecasts now can predict marine heatwaves three to four months ahead in Australia, the United States and other regions. Those forecasts give fishery managers and conservation agencies time to cut allowable catches or start protection efforts.

Funding for ocean monitoring is under pressure. The current U.S. administration last year cut climate data gathering networks and moved to dismantle the National Center for Atmospheric Research. The administration later backed down on ending funding for a key ocean monitoring network.

Without ongoing data collection, forecast quality degrades. England said ending the measurement of climate change will not stop it happening. The only way to keep climate change from worsening is to reach net zero as soon as possible.

A typical El Nino lasts about a year. The heat does not stay in the ocean. Warmer oceans lead to more evaporation, boosting humidity and fueling more intense and more sudden extreme rain and floods. The question for traders is not whether the pattern will unfold. It is which supply chain links will snap first.