Grab a coffee. Sit down and get comfortable. The reading is long, intensive and should provide a view of what is happening in the economy, software development and AI landscape.
The Hormuz Crisis
Timeline
Peak Oil Prices
Scale of Disruption
- Globally 20% of oil and LNG (liquid natural gas) trade transits through the Strait of Hormuz. Largest oil supply disruption. Europe and Asia take the brunt of the disruption.
- European gas storage was already low: ~30% capacity (vs 60% in 2025, 77% in 2024) after harsh winter. QatarEnergy declared force majeure on all LNG exports
Energy Price Impact on Europe
Oil
Pre-conflict Brent crude was ~70$ / barrel and has peaked over 100$ / barrel. This has caused fuel prices to rise fast which will cause inflation to rise.
Natural Gas
The start of the conflict caused gas prices to jump 60%. As Europe has low storage levels (30% of capacity) it brings amplified vulnerability.
EU response
Spain lowered VAT on energy from 21% to 10%. Italy is thinking of using extra VAT revenue to compensate consumers. Portugal provided a temporary diesel tax cut and TotalEnergies in France capped prices voluntarily with no government package.
Outcome
Will this speed and increase investments to renewable energy so we aren’t as reliant on global supply chains?
ECB Monetary Policy
Held deposit rate at 2.0% and marginal lending 2.4%. Statement:
“The war in the Middle East has made the outlook significantly more uncertain, creating upside risks for inflation and downside risks for economic growth”
Revised inflation numbers are 2.6% inflation for 2026 which is up from 1.9% in December forecast. Also growth of GDP was lowered from 1.2% to 0.9%. If crude oil peaks at 150$ / barrel inflation could reach 4.4%
There is strong expectation of rate hikes this year to curb inflation. Concern is to avoid 2022 when ECB was too slow to react to Russia-Ukraine energy shock.
Finnish Economy
Finland turned a corner in Q4 2025 after a near-stagnation. Private investment grew but recovery as a whole is fragile and early-stage. The Hormuz crisis is now threatening to derail it.
GDP Growth
| Source | 2025 | 2026 Forecast | 2027 Forecast |
|---|---|---|---|
| Bank of Finland (December 2025) | 0.2% | 0.8% | 1.7% |
| Bank of Finland (June 2025) | 0.5% | 1.5% | 1.6% |
| EU Commission (Autumn 2025) | ~0.1% | ~1.0% | ~1.0% |
| MuniFin (Q1 2026) | — | 1.5% | 2.0% |
| Ministry of Finance | 0.2% | 1.1% | 1.7% |
| OECD | — | 0.9% | 1.7% |
| IMF | — | 1.3% | — |
The pre-crisis forecast of inflation was ~1.5% for 2026 but energy shock will push it higher but keep it lower than ECB’s predicted eurozone average of 2.6%.
Unemployment has peaked at 9.8% in September 2025 but has been slowly declining. Expected average is 9.3 - 9.5% in 2026. With the government budget deficit expected to be at 4% in 2026 which can be lower than in 2025 and defence spending rising it can boost the economy momentarily.
Finnish Energy Position
Strengths we have in relation to some EU peers.
- Oil’s share of total energy supply has declined 19-21% (2023)
- Nuclear power is the largest source of energy in Finland (~40% of total)
- Strong renewable mix. 56-57% of total energy
Our position is relatively strong on energy but our trading partners will feel the hit. Our vulnerabilities:
- 100% dependent on imported fossil fuels
- Oil powers ~40% of transport energy
- Key export markets are severely exposed to energy shocks.
IT-Specific Cost Impacts
Cloud / Data Center Energy Costs
Energy accounts up to 60% of the data center operating costs. (TechUK). Gas prices increasing will feed into rising costs for cloud providers.
Hyperscaler capex commitments remain massive but are somewhat assuming energy costs at 2024 levels. These will be revised and have been revised by OpenAI for example.
AI workloads are energy-intensive and we can expect costs to be passed through to companies/users.
Hardware Supply Chain
Disruption of helium supply which is critical for semiconductor manufacturing will have adverse effects to prices. The Gulf region provides ~45% of global sulfur supply which is used in chip manufacturing processes. (IEA, 2025)
Fertilizer and aluminum supply being disrupted will cascade into broader industrial costs.
Results in hardware lead times likely to increase which increases prices for the current supply. It will take time for supply chains to adjust and be less reliant on singular “chokepoints”.
Cloud costs as a whole
Industry analysts expect mid-2026 increases in data center costs to be 5-10% regardless of the provider. Generally having 3-6 month lag between procurement cost changes and retail pricing adjustments.
Hyperscalers may absorb temporarily due to margin flexibility. Expect or prepare for energy surcharges.
AI & Technology Shifts
AI-Assisted Development: From Technology to Organizational Change
84% of developers use AI tools daily or plan to adopt them (Stack Overflow Developer Survey 2025). In the same study 36% say they don’t trust the code those tools produce which is a good thing from our experience.
AI is everywhere but trust is eroding at the same pace adoption is growing. What does this mean for your organization?
Developers are gaining. Everyone else is waiting.
The benefits of AI flow to one place today: the experienced developer’s command line. Claude Code, Cursor, GitHub Copilot, Codex. These tools have genuinely changed the daily work of senior developers. Code is written faster but is all else lacking?
The situation for business roles is different. Pilots have been launched, licenses purchased and exciting demo videos watched with hefty promises. But nobody owns the ROI conversation. The pilot lives inside a project organization or on the desk of an enthusiastic middle manager. Not in the P&L.
At Bytecraft we see this as a recurring pattern. AI investment gets made into tools like Cursor, Copilot, Claude and Codex but processes don’t change. Be it from integrations, how it’s implemented into the workflows or how the actual use goes.
Junior developer: AI’s first casualty
Junior developers are finding it harder to get hired. When a senior developer with AI tooling produces what used to require three people. This changed hiring interest toward the experienced or disappeared altogether.
For the short term this is sensible. For longer not so much. Hollowing of your talent pipeline and industries can run out of seniors.
How we are developing and including today’s juniors in the development work does provide the structure for tomorrow. They might be able to adopt new tools faster than seniors where they then balance each other and be more efficient.
Theory of constraints: AI accelerates a broken process
The Theory of Constraints is a management philosophy based on the premise that every complex system has one specific “bottleneck” that limits its total throughput and focusing improvement efforts anywhere else is essentially a waste of time.
This is the sharpest pain point in the entire conversation. AI speeds up individual tasks. It does not fix the system those tasks live inside.
If the bottleneck in your software delivery is requirements definition, approval cycles or stakeholder coordination. In these situations making developers faster doesn’t change the outcome. Output piles up at the next bottleneck more quickly and will eventually slow down due to the cognitive load of people jumping back and forth between new and old.
Organizations have added AI to existing org charts, meetings and existing approval structures. Individual developers are more productive. Team throughput has not improved proportionally and won’t until you change your organization to handle the bottlenecks.
AI is an organizational challenge
Three questions to ask yourself in your organization to gauge where you are:
- Who reviews AI-generated code?
- How is the growth of junior developers protected?
- Where are the bottlenecks in software development?
Consulting and Hiring of Software professionals
Hiring of data engineers and AI developers
Salary levels for data engineers have gone through the roof (+7-8000€ a month for seniors) due to the demand. AI has seeped into the job titles when it is a tool that is expected of everyone these days. We expect this to go away as everyone is using it. Extent depends on the organization and project instead of what the developer would like to use. As was before AI.
There has been some rise in the open roles for software professionals.
Consulting
The consulting industry has also picked up due companies’ need for dealing with business development debt. Many software consultancies have adapted their approach and/or offering to support this new age. Like we did with clarified focus on helping organizations adopt AI with new practices and mentoring developers to get the most out of their toolkit.
Death of a junior consultant
The death of a “junior” consultant has come to fruition. Consulting is for seniors or highly specialized skills. For some companies which do projects they exist but companies looking to build teams and increase velocity they don’t.
Regulations & Compliance
EU AI Act
The Act will be fully applicable on 2nd of August 2026. Rules for high-risk AI systems (biometrics, critical infrastructure, employment, healthcare, law enforcement, etc.) take effect along with transparency obligations.
Most Finnish organizations deploying AI are entering the enforcement window now. High-risk classification, quality management systems and technical documentation need to be in place before August.
Public sector IT & Procurement reform
The Finnish Ministry of Employment under Minister Matias Marttinen introduced Government Proposal HE 2/2026 in February 2026.
Key changes in the procurement reform (Lieke):
- Two new obligations for procurements exceeding EU thresholds are planned to enter into force on 1st of October 2026:
- Mandatory re-tendering if only one bid is received in an open procedure
- Mandatory division of procurements into lots.
- The contentious 10% minimum ownership rule for in-house entities which could open several billion euros of market to competition is proposed to take effect 1st of July 2027, with transitional periods extending to 2030 for certain health and social services.
- Existing agreements with in-house entities that don’t comply with the new rules must be notified to the State Treasury by 30rd of September 2026.
The in-house entity rules create potential business for private IT consultancies competing for contracts previously awarded without tendering.
Wildcards and Takeaways
- Expect cloud costs to rise. Check the clauses in contracts related to energy surcharges. Might be time to look for new providers too. (We can help with Upcloud comparison to current hyperscalers, Azure, AWS, GCP)
- Only senior teams aren’t ideal. They have never been.
- Expect AI costs to rise in the future. Plan accordingly of where AI has actual ROI.
- Learning is faster than ever. Think accordingly on your hiring needs.
We are having a webinar about AI’s use in product development aimed at business and product owners. Concrete examples how to use it for backlog handling, stakeholder communication and building logic testing apps.
Register to the waitlist via the form below.
