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Introduction to Minimum Cost Flow Optimization in Python

Minimum cost flow optimization minimizes the cost of moving flow through a network of nodes and edges. Nodes include sources (supply) and sinks (demand), with different costs and capacity limits. The aim is to find the least costly way to move volume from sources to sinks while adhering to all capacity limitations. Applications Applications of […]

Minimum cost flow optimization minimizes the cost of moving flow through a network of nodes and edges. Nodes include sources (supply) and sinks (demand), with different costs and capacity limits. The aim is to find the least costly way to move volume from sources to sinks while adhering to all capacity limitations.

Applications

Applications of minimum cost flow optimization are vast and varied, spanning multiple industries and sectors. This approach is crucial in logistics and supply chain management, where it is used to minimize transportation costs while ensuring timely delivery of goods. In telecommunications, it helps in optimizing the routing of data through networks to reduce latency and improve bandwidth utilization. The energy sector leverages minimum cost flow optimization to efficiently distribute electricity through power grids, reducing losses and operational costs. Urban planning and infrastructure development also benefit from this optimization technique, as it assists in designing efficient public transportation systems and water distribution networks.

Example

Below is a simple flow optimization example:

The image above illustrates a minimum cost flow optimization problem with six nodes and eight edges. Nodes A and B serve as sources, each with a supply of 50 units, while nodes E and F act as sinks, each with a demand of 40 units. Every edge has a maximum capacity of 25 units, with variable costs indicated in the image. The objective of the optimization is to allocate flow on each edge to move the required units from nodes A and B to nodes E and F, respecting the edge capacities at the lowest possible cost.

Node F can only receive supply from node B. There are two paths: directly or through node D. The direct path has a cost of 2, while the indirect path via D has a combined cost of 3. Thus, 25 units (the maximum edge capacity) are moved directly from B to F. The remaining 15 units are routed via B -D-F to meet the demand.

Currently, 40 out of 50 units have been transferred from node B, leaving a remaining supply of 10 units that can be moved to node E. The available pathways for supplying node E include: A-E and B-E with a cost of 3, A-C-E with a cost of 4, and B-C-E with a cost of 5. Consequently, 25 units are transported from A-E (limited by the edge capacity) and 10 units from B-E (limited by the remaining supply at node B). To meet the demand of 40 units at node E, an additional 5 units are moved via A-C-E, resulting in no flow being allocated to the B-C pathway.

Mathematical formulation

I introduce two mathematical formulations of minimum cost flow optimization:

1. LP (linear program) with continuous variables only

2. MILP (mixed integer linear program) with continuous and discrete variables

I am using following definitions:

Definitions

LP formulation

This formulation only contains decision variables that are continuous, meaning they can have any value as long as all constraints are fulfilled. Decision variables are in this case the flow variables x(u, v) of all edges.

The objective function describes how the costs that are supposed to be minimized are calculated. In this case it is defined as the flow multiplied with the variable cost summed up over all edges:

Constraints are conditions that must be satisfied for the solution to be valid, ensuring that the flow does not exceed capacity limitations.

First, all flows must be non-negative and not exceed to edge capacities:

Flow conservation constraints ensure that the same amount of flow that goes into a node has to come out of the node. These constraints are applied to all nodes that are neither sources nor sinks:

For source and sink nodes the difference of out flow and in flow is smaller or equal the supply of the node:

If v is a source the difference of outflow minus inflow must not exceed the supply s(v). In case v is a sink node we do not allow that more than -s(v) can flow into the node than out of the node (for sinks s(v) is negative).

MILP

Additionally, to the continuous variables of the LP formulation, the MILP formulation also contains discreate variables that can only have specific values. Discrete variables allow to restrict the number of used nodes or edges to certain values. It can also be used to introduce fixed costs for using nodes or edges. In this article I show how to add fixed costs. It is important to note that adding discrete decision variables makes it much more difficult to find an optimal solution, hence this formulation should only be used if a LP formulation is not possible.

The objective function is defined as:

With three terms: variable cost of all edges, fixed cost of all edges, and fixed cost of all nodes.

The maximum flow that can be allocated to an edge depends on the edge’s capacity, the edge selection variable, and the origin node selection variable:

This equation ensures that flow can only be assigned to edges if the edge selection variable and the origin node selection variable are 1.

The flow conservation constraints are equivalent to the LP problem.

Implementation

In this section I explain how to implement a MILP optimization in Python. You can find the code in this repo.

Libraries

To build the flow network, I used NetworkX which is an excellent library (https://networkx.org/) for working with graphs. There are many interesting articles that demonstrate how powerful and easy to use NetworkX is to work with graphs, i.a. customizing NetworkX GraphsNetworkX: Code Demo for Manipulating SubgraphsSocial Network Analysis with NetworkX: A Gentle Introduction.

One important aspect when building an optimization is to make sure that the input is correctly defined. Even one small error can make the problem infeasible or can lead to an unexpected solution. To avoid this, I used Pydantic to validate the user input and raise any issues at the earliest possible stage. This article gives an easy to understand introduction to Pydantic.

To transform the defined network into a mathematical optimization problem I used PuLP. Which allows to define all variables and constraint in an intuitive way. This library also has the advantage that it can use many different solvers in a simple pug-and-play fashion. This article provides good introduction to this library.

Defining nodes and edges

The code below shows how nodes are defined:

from pydantic import BaseModel, model_validator
from typing import Optional

# node and edge definitions
class Node(BaseModel, frozen=True):
    """
    class of network node with attributes:
    name: str - name of node
    demand: float - demand of node (if node is sink)
    supply: float - supply of node (if node is source)
    capacity: float - maximum flow out of node
    type: str - type of node
    x: float - x-coordinate of node
    y: float - y-coordinate of node
    fixed_cost: float - cost of selecting node
    """
    name: str
    demand: Optional[float] = 0.0
    supply: Optional[float] = 0.0
    capacity: Optional[float] = float('inf')
    type: Optional[str] = None
    x: Optional[float] = 0.0
    y: Optional[float] = 0.0
    fixed_cost: Optional[float] = 0.0

    @model_validator(mode='after')
    def validate(self):
        """
        validate if node definition are correct
        """
        # check that demand is non-negative
        if self.demand < 0 or self.demand == float('inf'): raise ValueError('demand must be non-negative and finite')
        # check that supply is non-negative
        if self.supply < 0: raise ValueError('supply must be non-negative')
        # check that capacity is non-negative
        if self.capacity < 0: raise ValueError('capacity must be non-negative')
        # check that fixed_cost is non-negative
        if self.fixed_cost < 0: raise ValueError('fixed_cost must be non-negative')
        return self

Nodes are defined through the Node class which is inherited from Pydantic’s BaseModel. This enables an automatic validation that ensures that all properties are defined with the correct datatype whenever a new object is created. In this case only the name is a required input, all other properties are optional, if they are not provided the specified default value is assigned to them. By setting the “frozen” parameter to True I made all properties immutable, meaning they cannot be changed after the object has been initialized.

The validate method is executed after the object has been initialized and applies more checks to ensure the provided values are as expected. Specifically it checks that demand, supply, capacity, variable cost and fixed cost are not negative. Furthermore, it also does not allow infinite demand as this would lead to an infeasible optimization problem.

These checks look trivial, however their main benefit is that they will trigger an error at the earliest possible stage when an input is incorrect. Thus, they prevent creating a optimization model that is incorrect. Exploring why a model cannot be solved would be much more time consuming as there are many factors that would need to be analyzed, while such “trivial” input error may not be the first aspect to investigate.

Edges are implemented as follows:

class Edge(BaseModel, frozen=True):
"""
class of edge between two nodes with attributes:
origin: 'Node' - origin node of edge
destination: 'Node' - destination node of edge
capacity: float - maximum flow through edge
variable_cost: float - cost per unit flow through edge
fixed_cost: float - cost of selecting edge
"""
origin: Node
destination: Node
capacity: Optional[float] = float('inf')
variable_cost: Optional[float] = 0.0
fixed_cost: Optional[float] = 0.0

@model_validator(mode='after')
def validate(self):
"""
validate of edge definition is correct
"""
# check that node names are different
if self.origin.name == self.destination.name: raise ValueError('origin and destination names must be different')
# check that capacity is non-negative
if self.capacity < 0: raise ValueError('capacity must be non-negative')
# check that variable_cost is non-negative
if self.variable_cost < 0: raise ValueError('variable_cost must be non-negative')
# check that fixed_cost is non-negative
if self.fixed_cost < 0: raise ValueError('fixed_cost must be non-negative')
return self

The required inputs are an origin node and a destination node object. Additionally, capacity, variable cost and fixed cost can be provided. The default value for capacity is infinity which means if no capacity value is provided it is assumed the edge does not have a capacity limitation. The validation ensures that the provided values are non-negative and that origin node name and the destination node name are different.

Initialization of flowgraph object

To define the flowgraph and optimize the flow I created a new class called FlowGraph that is inherited from NetworkX’s DiGraph class. By doing this I can add my own methods that are specific to the flow optimization and at the same time use all methods DiGraph provides:

from networkx import DiGraph
from pulp import LpProblem, LpVariable, LpMinimize, LpStatus

class FlowGraph(DiGraph):
    """
    class to define and solve minimum cost flow problems
    """
    def __init__(self, nodes=[], edges=[]):
        """
        initialize FlowGraph object
        :param nodes: list of nodes
        :param edges: list of edges
        """
        # initialialize digraph
        super().__init__(None)

        # add nodes and edges
        for node in nodes: self.add_node(node)
        for edge in edges: self.add_edge(edge)


    def add_node(self, node):
        """
        add node to graph
        :param node: Node object
        """
        # check if node is a Node object
        if not isinstance(node, Node): raise ValueError('node must be a Node object')
        # add node to graph
        super().add_node(node.name, demand=node.demand, supply=node.supply, capacity=node.capacity, type=node.type, 
                         fixed_cost=node.fixed_cost, x=node.x, y=node.y)
        
    
    def add_edge(self, edge):    
        """
        add edge to graph
        @param edge: Edge object
        """   
        # check if edge is an Edge object
        if not isinstance(edge, Edge): raise ValueError('edge must be an Edge object')
        # check if nodes exist
        if not edge.origin.name in super().nodes: self.add_node(edge.origin)
        if not edge.destination.name in super().nodes: self.add_node(edge.destination)

        # add edge to graph
        super().add_edge(edge.origin.name, edge.destination.name, capacity=edge.capacity, 
                         variable_cost=edge.variable_cost, fixed_cost=edge.fixed_cost)

FlowGraph is initialized by providing a list of nodes and edges. The first step is to initialize the parent class as an empty graph. Next, nodes and edges are added via the methods add_node and add_edge. These methods first check if the provided element is a Node or Edge object. If this is not the case an error will be raised. This ensures that all elements added to the graph have passed the validation of the previous section. Next, the values of these objects are added to the Digraph object. Note that the Digraph class also uses add_node and add_edge methods to do so. By using the same method name I am overwriting these methods to ensure that whenever a new element is added to the graph it must be added through the FlowGraph methods which validate the object type. Thus, it is not possible to build a graph with any element that has not passed the validation tests.

Initializing the optimization problem

The method below converts the network into an optimization model, solves it, and retrieves the optimized values.

  def min_cost_flow(self, verbose=True):
        """
        run minimum cost flow optimization
        @param verbose: bool - print optimization status (default: True)
        @return: status of optimization
        """
        self.verbose = verbose

        # get maximum flow
        self.max_flow = sum(node['demand'] for _, node in super().nodes.data() if node['demand'] > 0)

        start_time = time.time()
        # create LP problem
        self.prob = LpProblem("FlowGraph.min_cost_flow", LpMinimize)
        # assign decision variables
        self._assign_decision_variables()
        # assign objective function
        self._assign_objective_function()
        # assign constraints
        self._assign_constraints()
        if self.verbose: print(f"Model creation time: {time.time() - start_time:.2f} s")

        start_time = time.time()
        # solve LP problem
        self.prob.solve()
        solve_time = time.time() - start_time

        # get status
        status = LpStatus[self.prob.status]

        if verbose:
            # print optimization status
            if status == 'Optimal':
                # get objective value
                objective = self.prob.objective.value()
                print(f"Optimal solution found: {objective:.2f} in {solve_time:.2f} s")
            else:
                print(f"Optimization status: {status} in {solve_time:.2f} s")
        
        # assign variable values
        self._assign_variable_values(status=='Optimal')

        return status

Pulp’s LpProblem is initialized, the constant LpMinimize defines it as a minimization problem — meaning it is supposed to minimize the value of the objective function. In the following lines all decision variables are initialized, the objective function as well as all constraints are defined. These methods will be explained in the following sections.

Next, the problem is solved, in this step the optimal value of all decision variables is determined. Following the status of the optimization is retrieved. When the status is “Optimal” an optimal solution could be found other statuses are “Infeasible” (it is not possible to fulfill all constraints), “Unbounded” (the objective function can have an arbitrary low values), and “Undefined” meaning the problem definition is not complete. In case no optimal solution was found the problem definition needs to be reviewed.

Finally, the optimized values of all variables are retrieved and assigned to the respective nodes and edges.

Defining decision variables

All decision variables are initialized in the method below:

   def _assign_variable_values(self, opt_found):
        """
        assign decision variable values if optimal solution found, otherwise set to None
        @param opt_found: bool - if optimal solution was found
        """
        # assign edge values        
        for _, _, edge in super().edges.data():
            # initialize values
            edge['flow'] = None
            edge['selected'] = None
            # check if optimal solution found
            if opt_found and edge['flow_var'] is not None:                    
                edge['flow'] = edge['flow_var'].varValue                    

                if edge['selection_var'] is not None: 
                    edge['selected'] = edge['selection_var'].varValue

        # assign node values
        for _, node in super().nodes.data():
            # initialize values
            node['selected'] = None
            if opt_found:                
                # check if node has selection variable
                if node['selection_var'] is not None: 
                    node['selected'] = node['selection_var'].varValue

First it iterates through all edges and assigns continuous decision variables if the edge capacity is greater than 0. Furthermore, if fixed costs of the edge are greater than 0 a binary decision variable is defined as well. Next, it iterates through all nodes and assigns binary decision variables to nodes with fixed costs. The total number of continuous and binary decision variables is counted and printed at the end of the method.

Defining objective

After all decision variables have been initialized the objective function can be defined:

    def _assign_objective_function(self):
        """
        define objective function
        """
        objective = 0
 
        # add edge costs
        for _, _, edge in super().edges.data():
            if edge['selection_var'] is not None: objective += edge['selection_var'] * edge['fixed_cost']
            if edge['flow_var'] is not None: objective += edge['flow_var'] * edge['variable_cost']
        
        # add node costs
        for _, node in super().nodes.data():
            # add node selection costs
            if node['selection_var'] is not None: objective += node['selection_var'] * node['fixed_cost']

        self.prob += objective, 'Objective',

The objective is initialized as 0. Then for each edge fixed costs are added if the edge has a selection variable, and variable costs are added if the edge has a flow variable. For all nodes with selection variables fixed costs are added to the objective as well. At the end of the method the objective is added to the LP object.

Defining constraints

All constraints are defined in the method below:

  def _assign_constraints(self):
        """
        define constraints
        """
        # count of contraints
        constr_count = 0
        # add capacity constraints for edges with fixed costs
        for origin_name, destination_name, edge in super().edges.data():
            # get capacity
            capacity = edge['capacity'] if edge['capacity'] < float('inf') else self.max_flow
            rhs = capacity
            if edge['selection_var'] is not None: rhs *= edge['selection_var']
            self.prob += edge['flow_var'] <= rhs, f"capacity_{origin_name}-{destination_name}",
            constr_count += 1
            
            # get origin node
            origin_node = super().nodes[origin_name]
            # check if origin node has a selection variable
            if origin_node['selection_var'] is not None:
                rhs = capacity * origin_node['selection_var'] 
                self.prob += (edge['flow_var'] <= rhs, f"node_selection_{origin_name}-{destination_name}",)
                constr_count += 1

        total_demand = total_supply = 0
        # add flow conservation constraints
        for node_name, node in super().nodes.data():
            # aggregate in and out flows
            in_flow = 0
            for _, _, edge in super().in_edges(node_name, data=True):
                if edge['flow_var'] is not None: in_flow += edge['flow_var']
            
            out_flow = 0
            for _, _, edge in super().out_edges(node_name, data=True):
                if edge['flow_var'] is not None: out_flow += edge['flow_var']

            # add node capacity contraint
            if node['capacity'] < float('inf'):
                self.prob += out_flow = demand - supply
                rhs = node['demand'] - node['supply']
                self.prob += in_flow - out_flow >= rhs, f"flow_balance_{node_name}",
            constr_count += 1

            # update total demand and supply
            total_demand += node['demand']
            total_supply += node['supply']

        if self.verbose:
            print(f"Constraints: {constr_count}")
            print(f"Total supply: {total_supply}, Total demand: {total_demand}")

First, capacity constraints are defined for each edge. If the edge has a selection variable the capacity is multiplied with this variable. In case there is no capacity limitation (capacity is set to infinity) but there is a selection variable, the selection variable is multiplied with the maximum flow that has been calculated by aggregating the demand of all nodes. An additional constraint is added in case the edge’s origin node has a selection variable. This constraint means that flow can only come out of this node if the selection variable is set to 1.

Following, the flow conservation constraints for all nodes are defined. To do so the total in and outflow of the node is calculated. Getting all in and outgoing edges can easily be done by using the in_edges and out_edges methods of the DiGraph class. If the node has a capacity limitation the maximum outflow will be constraint by that value. For the flow conservation it is necessary to check if the node is either a source or sink node or a transshipment node (demand equals supply). In the first case the difference between inflow and outflow must be greater or equal the difference between demand and supply while in the latter case in and outflow must be equal.

The total number of constraints is counted and printed at the end of the method.

Retrieving optimized values

After running the optimization, the optimized variable values can be retrieved with the following method:

    def _assign_variable_values(self, opt_found):
        """
        assign decision variable values if optimal solution found, otherwise set to None
        @param opt_found: bool - if optimal solution was found
        """
        # assign edge values        
        for _, _, edge in super().edges.data():
            # initialize values
            edge['flow'] = None
            edge['selected'] = None
            # check if optimal solution found
            if opt_found and edge['flow_var'] is not None:                    
                edge['flow'] = edge['flow_var'].varValue                    

                if edge['selection_var'] is not None: 
                    edge['selected'] = edge['selection_var'].varValue

        # assign node values
        for _, node in super().nodes.data():
            # initialize values
            node['selected'] = None
            if opt_found:                
                # check if node has selection variable
                if node['selection_var'] is not None: 
                    node['selected'] = node['selection_var'].varValue 

This method iterates through all edges and nodes, checks if decision variables have been assigned and adds the decision variable value via varValue to the respective edge or node.

Demo

To demonstrate how to apply the flow optimization I created a supply chain network consisting of 2 factories, 4 distribution centers (DC), and 15 markets. All goods produced by the factories have to flow through one distribution center until they can be delivered to the markets.

Supply chain problem

Node properties were defined:

Node definitions

Ranges mean that uniformly distributed random numbers were generated to assign these properties. Since Factories and DCs have fixed costs the optimization also needs to decide which of these entities should be selected.

Edges are generated between all Factories and DCs, as well as all DCs and Markets. The variable cost of edges is calculated as the Euclidian distance between origin and destination node. Capacities of edges from Factories to DCs are set to 350 while from DCs to Markets are set to 100.

The code below shows how the network is defined and how the optimization is run:

# Define nodes
factories = [Node(name=f'Factory {i}', supply=700, type='Factory', fixed_cost=100, x=random.uniform(0, 2),
                  y=random.uniform(0, 1)) for i in range(2)]
dcs = [Node(name=f'DC {i}', fixed_cost=25, capacity=500, type='DC', x=random.uniform(0, 2), 
            y=random.uniform(0, 1)) for i in range(4)]
markets = [Node(name=f'Market {i}', demand=random.randint(1, 100), type='Market', x=random.uniform(0, 2), 
                y=random.uniform(0, 1)) for i in range(15)]

# Define edges
edges = []
# Factories to DCs
for factory in factories:
    for dc in dcs:
        distance = ((factory.x - dc.x)**2 + (factory.y - dc.y)**2)**0.5
        edges.append(Edge(origin=factory, destination=dc, capacity=350, variable_cost=distance))

# DCs to Markets
for dc in dcs:
    for market in markets:
        distance = ((dc.x - market.x)**2 + (dc.y - market.y)**2)**0.5
        edges.append(Edge(origin=dc, destination=market, capacity=100, variable_cost=distance))

# Create FlowGraph
G = FlowGraph(edges=edges)

G.min_cost_flow()

The output of flow optimization is as follows:

Variable types: 68 continuous, 6 binary
Constraints: 161
Total supply: 1400.0, Total demand: 909.0
Model creation time: 0.00 s
Optimal solution found: 1334.88 in 0.23 s

The problem consists of 68 continuous variables which are the edges’ flow variables and 6 binary decision variables which are the selection variables of the Factories and DCs. There are 161 constraints in total which consist of edge and node capacity constraints, node selection constraints (edges can only have flow if the origin node is selected), and flow conservation constraints. The next line shows that the total supply is 1400 which is higher than the total demand of 909 (if the demand was higher than the supply the problem would be infeasible). Since this is a small optimization problem, the time to define the optimization model was less than 0.01 seconds. The last line shows that an optimal solution with an objective value of 1335 could be found in 0.23 seconds.

Additionally, to the code I described in this post I also added two methods that visualize the optimized solution. The code of these methods can also be found in the repo.

Flow graph

All nodes are located by their respective x and y coordinates. The node and edge size is relative to the total volume that is flowing through. The edge color refers to its utilization (flow over capacity). Dashed lines show edges without flow allocation.

In the optimal solution both Factories were selected which is inevitable as the maximum supply of one Factory is 700 and the total demand is 909. However, only 3 of the 4 DCs are used (DC 0 has not been selected).

In general the plot shows the Factories are supplying the nearest DCs and DCs the nearest Markets. However, there are a few exceptions to this observation: Factory 0 also supplies DC 3 although Factory 1 is nearer. This is due to the capacity constraints of the edges which only allow to move at most 350 units per edge. However, the closest Markets to DC 3 have a slightly higher demand, hence Factory 0 is moving additional units to DC 3 to meet that demand. Although Market 9 is closest to DC 3 it is supplied by DC 2. This is because DC 3 would require an additional supply from Factory 0 to supply this market and since the total distance from Factory 0 over DC 3 is longer than the distance from Factory 0 through DC 2, Market 9 is supplied via the latter route.

Another way to visualize the results is via a Sankey diagram which focuses on visualizing the flows of the edges:

Sankey flow diagram

The colors represent the edges’ utilizations with lowest utilizations in green changing to yellow and red for the highest utilizations. This diagram shows very well how much flow goes through each node and edge. It highlights the flow from Factory 0 to DC 3 and also that Market 13 is supplied by DC 2 and DC 1.

Summary

Minimum cost flow optimizations can be a very helpful tool in many domains like logistics, transportation, telecommunication, energy sector and many more. To apply this optimization it is important to translate a physical system into a mathematical graph consisting of nodes and edges. This should be done in a way to have as few discrete (e.g. binary) decision variables as necessary as those make it significantly more difficult to find an optimal solution. By combining Python’s NetworkX, Pulp and Pydantic libraries I built an flow optimization class that is intuitive to initialize and at the same time follows a generalized formulation which allows to apply it in many different use cases. Graph and flow diagrams are very helpful to understand the solution found by the optimizer.

If not otherwise stated all images were created by the author.

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In an oil and gas report sent to Rigzone by the Macquarie team prior to the release of the U.S. Energy Information Administration’s (EIA) weekly petroleum status report, Macquarie strategists revealed that they are forecasting that U.S. crude inventories will increase week on week. “We are forecasting U.S. crude inventories up 1.9 million barrels for the week ending January 30,” the strategists, including Walt Chancellor, said in the report. “This follows a 2.3 million barrel draw in the prior week, with the crude balance realizing tighter relative to our expectations,” they added. “For this week’s stats, we see significant room for volatility due to winter storm impacts on oil production, refinery runs, and product demand,” they continued. “In any event, for the week ending 1/30, from refineries, we look for another reduction in crude runs (-0.3 million barrels per day), with storm effects and turnaround timing adding noise to the picture,” they noted. “Among net imports”, the strategists said in the report that they “model a large increase, with exports sharply lower (-1.0 million barrels per day) and imports sharply higher (+0.8 million barrels per day) on a nominal basis”. The strategists warned that timing of cargoes remains a source of potential volatility in the weekly crude balance. They went on to state in the report that, “from implied domestic supply (prod.+adj.+transfers)”, they “look for a large nominal reduction (-1.6 million barrels per day) following a strong print in the prior week and accounting for freeze impacts”. “Notably, while visibility on the ultimate impact of last week’s freeze event remains limited, we believe oil production has largely recovered to this point. Rounding out the picture, we anticipate a smaller increase (+0.2 million barrels) in SPR [U.S. Strategic Petroleum Reserve] stocks for the week ending 1/30,” they added. “Among products, we

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Equinor Reduces Share Buyback

Equinor ASA reined in its share buyback after fourth-quarter profit missed analyst estimates amid a drop in oil and gas prices. The Norwegian energy giant will repurchase as much as $1.5 billion of shares this year, down from $5 billion in 2025, the company said Wednesday. Profit slumped by almost a third year-on-year. Equinor was among many oil and gas producers to funnel surplus cash to shareholders after Russia’s 2022 invasion of Ukraine drove up energy prices, generating massive profits for the industry. Some companies are now seeking to scale back payouts after the markets weakened amid plentiful supplies. “We are coming out of a supercycle in natural gas,” Equinor Chief Financial Officer Torgrim Reitan said in a Bloomberg Television interview. “This is the first year where we are normalized, where we have to manage within our means and this is a normal level.” Adjusted operating income after tax dropped to $1.55 billion, falling short of the $1.59 billion average estimate. Equinor is the first of Europe’s major energy companies to report quarterly numbers, and the results may set the tone for the earnings season. Oil closed out the year with its steepest annual loss since 2020. European gas also posted a sharp annual decline.   At Equinor, the impact of lower prices was mitigated by a strong quarter for its midstream unit and an increase in oil and gas production at home and abroad, with full-year volumes rising to a record. The company’s new Johan Castberg field and Brazil’s Bacalhau development both contributed to the gain, and Equinor sees output growing about 3% this year. Equinor’s marketing, midstream and processing, or MMP, business reported adjusted operating income of $678 million following a boost in third-party volumes. The company in October revised its quarterly guidance for the unit, saying it would target earnings of “around $400 million

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Oil Ends Day Higher After Drone Incident

Oil edged higher after US and Iranian forces appeared to square off in the sea and air, heightening concerns about an escalation in tensions. West Texas Intermediate rose to settle above $63 a barrel after an Iranian drone approached an American aircraft carrier in the Arabian Sea and was shot down. The episode restored some geopolitical risk premium that had ebbed in recent days amid signs Washington was softening its stance on Tehran. Futures pared some gains after White House Press Secretary Karoline Leavitt said US President Donald Trump wants to pursue diplomacy “first” with Iran. Prices advanced in post-settlement trading, rising as much as 3.3%. The development came hours after an oil tanker that is part of a US military fuel procurement program was hailed by Iranian ships in the Strait of Hormuz, evincing renewed risks to maritime traffic in the region. Tanker rates have soared in recent days over concerns about the Hormuz chokepoint through which about one-third of the world’s oil flows. The events underscore how recent US moves toward diplomacy with Iran reflect not a desire to deescalate but a calculation that Washington has sufficient leverage to strong-arm Tehran into a nuclear agreement, among other demands, according to Gregory Brew, geopolitical analyst at the Eurasia Group. He estimates that a $3 to $5 risk premium is currently baked into prices. Leavitt’s comments are likely an attempt “to brush off efforts by the Iranians to destabilize the environment, because the environment right now is favorable to the US,” Brew added. Still, Tuesday’s episode whipsawed investors who had been watching moves that suggested the US was steering clear of military strikes on the country over its nuclear program and handling of recent protests. Trump earlier said talks could begin within days after Tehran signaled it was ready to

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Energy Department Announces Members of the Office of Science Advisory Committee, Strengthening Gold Standard Science in America

WASHINGTON—The U.S. Department of Energy (DOE) today announced the chair and members of the newly established Office of Science Advisory Committee (SCAC), a unified advisory body that will provide independent advice on complex scientific and technical challenges across the Department’s Office of Science. Today’s announcement advances the Department’s implementation of President Trump’s Executive Order Restoring Gold Standard Science as the cornerstone of federal research—ensuring that the Department and its National Laboratory systems’ science is collaborative, transparent, and guided by evidence to rebuild public trust in science. As DOE modernizes and strengthens its scientific enterprise, SCAC will provide expert input to help inform priorities, improve coordination, and address cross-cutting research challenges across the Office of Science. “The establishment of SCAC underscores the Department’s commitment to scientific integrity and the power of partnership,” said DOE Under Secretary for Science Darío Gil. “By bringing together leading minds from diverse institutions, we’re forging a collaborative framework that will not only enhance our scientific endeavors but also accelerate the translation of fundamental research into tangible benefits for the American people. This committee exemplifies how shared vision and collective expertise are essential for navigating the complex scientific landscape of today and tomorrow.” Members of SCAC, appointed by Under Secretary Gil, represent the full breadth of Office of Science research, drawing expertise from leaders across academia, industry, science philanthropy, and the Department’s National Laboratories. The Committee will help the Office of Science adapt to a rapidly evolving research landscape and address interdisciplinary challenges in a streamlined and flexible manner. It will also provide advice on initiatives that are priorities for the entire Office, including the Genesis Mission, scientific discovery, fusion energy, and quantum science. SCAC will be chaired by Persis Drell, professor of materials science and engineering and physics at Stanford University, provost emerita of Stanford, and

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Transmission planning, development improved since 2023 in most US regions: report

Listen to the article 4 min This audio is auto-generated. Please let us know if you have feedback. Dive Brief: Transmission planning and development is improving in most parts of the United States, driven by new federal planning requirements, according to a report released Tuesday by Americans for a Clean Energy Grid. New England’s grade jumped to a “B” from the “D+” it received in the benchmark report ACEG issued in 2023. However, the grade for Texas slipped to a “D-” from a “D+” two years ago, and the grade for the Southeast remained unchanged at “F.” “In the Southeast, a key hurdle for regional transmission planning is the lack of access to information and transparency,” Grid Strategies, which wrote the report, said. “Beyond the projects under development in Georgia, there is resistance to building large, high-voltage transmission.” Dive Insight: Transmission planning and development grades by region. Permission granted by Americans for a Clean Energy Grid “Transmission planning works when it’s proactive, coordinated, and long-term,” Christina Hayes, ACEG executive director, said in a press release. “The challenge now is scaling those successes fast enough — across and between regions — to keep electricity affordable and reliable for all Americans as demand continues to grow.” Regional transmission planning reforms from Federal Energy Regulatory Commission’s Order No. 1920 are beginning to take hold, and early progress is visible in several regions, Grid Strategies said in the report. “However, many regions continue to fall well short of best practices, and progress remains uneven relative to the scale and urgency of today’s transmission needs,” Grid Strategies said. The report comes amid surging load growth forecasts, which could lead to short-term, inefficient transmission fixes, it says. The report’s authors call for the power sector to embrace long‑term regional and interregional planning. “Proactive, holistic long‑term planning that also

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Azure outage disrupts VMs and identity services for over 10 hours

After multiple infrastructure scale-up attempts failed to handle the backlog and retry volumes, Microsoft ultimately removed traffic from the affected service to repair the underlying infrastructure without load. “The outage didn’t just take websites offline, but it halted development workflows and disrupted real-world operations,” said Pareekh Jain, CEO at EIIRTrend & Pareekh Consulting. Cloud outages on the rise Cloud outages have become more frequent in recent years, with major providers such as AWS, Google Cloud, and IBM all experiencing high-profile disruptions. AWS services were severely impacted for more than 15 hours when a DNS problem rendered the DynamoDB API unreliable. In November, a bad configuration file in Cloudflare’s Bot Management system led to intermittent service disruptions across several online platforms. In June, an invalid automated update disrupted the company’s identity and access management (IAM) system, resulting in users being unable to use Google to authenticate on third-party apps. “The evolving data center architecture is shaped by the shift to more demanding, intricate workloads driven by the new velocity and variability of AI. This rapid expansion is not only introducing complexities but also challenging existing dependencies. So any misconfiguration or mismanagement at the control layer can disrupt the environment,” said Neil Shah, co-founder and VP at Counterpoint Research. Preparing for the next cloud incident This is not an isolated incident. For CIOs, the event only reinforces the need to rethink resilience strategies. In the immediate aftermath when a hyperscale dependency fails, waiting is not a recommended strategy for CIOs, and they should focus on a strategy of stabilize, prioritize, and communicate, stated Jain. “First, stabilize by declaring a formal cloud incident with a single incident commander, quickly determining whether the issue affects control-plane operations or running workloads, and freezing all non-essential changes such as deployments and infrastructure updates.”

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Intel sets sights on data center GPUs amid AI-driven infrastructure shifts

Supply chain reliability is another underappreciated advantage. Hyperscalers want a credible second source, but only if Intel can offer stable, predictable roadmaps across multiple product generations. However, the company runs into a major constraint at the software layer. “The decisive bottleneck is software,” Rawat said. “CUDA functions as an industry operating standard, embedded across models, pipelines, and DevOps. Intel’s challenge is to prove that migration costs are low, and that ongoing optimization does not become a hidden engineering tax.” For enterprise buyers, that software gap translates directly into switching risk. Tighter integration of Intel CPUs, GPUs, and networking could improve system-level efficiency for enterprises and cloud providers, but the dominance of the CUDA ecosystem remains the primary barrier to switching, said Charlie Dai, VP and principal analyst at Forrester. “Even with strong hardware integration, buyers will hesitate without seamless compatibility with mainstream ML/DL frameworks and tooling,” Dai added.

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8 hot networking trends for 2026

Recurring license fees may have dissuaded enterprises from adopting AIOps in the past, but that’s changing, Morgan adds: “Over the past few years, vendors have added features and increased the value of those licenses, including 24×7 support. Now, by paying the equivalent of a fraction of a network engineer’s salary in license fees, a mid-sized enterprise can reduce hours spent on operations and level-one support in order to allocate more of their valuable networking experts’ time to AI projects. Every enterprise’s business case will be different, but with networking expertise in high demand, we predict that in 2026, the labor savings will outweigh the additional license costs for the majority of mid-to-large sized enterprises.” 2. AI boosts data center networking investments Enterprise data centers, which not so long ago were on the endangered species list, have made a remarkable comeback, driven by the reality that many AI workloads need to be hosted on premises, either for privacy, security, regulatory, latency or cost considerations. The global market for data center networking technologies was estimated at around $46 billion in 2025 and is projected to reach $103 billion by the end of 2030, a growth rate of nearly 18%, according to BCC Research: “The data center networking technologies market is rapidly changing due to increasing use of AI-powered solutions across data centers and sectors like telecom, IT, banking, financial services, insurance, government and commercial industries.” McKinsey predicts that global demand for data center capacity could nearly triple by 2030, with about 70% of that demand coming from AI workloads. McKinsey says both training and inference workloads are contributing to data center growth, with inference expected to become the dominant workload by 2030. 3. Private clouds roll in Clearly, the hyperscalers are driving most of the new data center construction, but enterprises are

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Cisco: Infrastructure, trust, model development are key AI challenges

“The G200 chip was for the scale out, because what’s happening now is these models are getting bigger where they don’t just fit within a single data center. You don’t have enough power to just pull into a single data center,” Patel said. “So now you need to have data centers that might be hundreds of kilometers apart, that operate like an ultra-cluster that are coherent. And so that requires a completely different chip architecture to make sure that you have capabilities like deep buffering and so on and so forth… You need to make sure that these data centers can be scaled across physical boundaries.”  “In addition, we are reaching the physical limits of copper and optics, and coherent optics especially are going to be extremely important as we go start building out this data center infrastructure. So that’s an area that you’re starting to see a tremendous amount of progress being made,” Patel said. The second constraint is the AI trust deficit, Patel said. “We currently need to make sure that these systems are trusted by the people that are using them, because if you don’t trust these systems, you’ll never use them,” Patel said. “This is the first time that security is actually becoming a prerequisite for adoption. In the past, you always ask the question whether you want to be secure, or you want to be productive. And those were kind of needs that offset each other,” Patel said. “We need to make sure that we trust not just using AI for cyber defense, but we trust AI itself,” Patel said. The third constraint is the notion of a data gap. AI models get trained on human-generated data that’s publicly available on the Internet, but “we’re running out,” Patel said. “And what you’re starting to see happen

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How Robotics Is Re-Engineering Data Center Construction and Operations

Physical AI: A Reusable Robotics Stack for Data Center Operations This is where the recent collaboration between Multiply Labs and NVIDIA becomes relevant, even though the application is biomanufacturing rather than data centers. Multiply Labs has outlined a robotics approach built on three core elements: Digital twins using NVIDIA Isaac Sim to model hardware and validate changes in simulation before deployment. Foundation-model-based skill learning via NVIDIA Isaac GR00T, enabling robots to generalize tasks rather than rely on brittle, hard-coded behaviors. Perception pipelines including FoundationPose and FoundationStereo, that convert expert demonstrations into structured training data. Taken together, this represents a reusable blueprint for data center robotics. Applying the Lesson to Data Center Environments The same physical-AI techniques now being applied in lab and manufacturing environments map cleanly onto the realities of data center operations, particularly where safety, uptime, and variability intersect. Digital-twin-first deployment Before a robot ever enters a live data hall, it needs to be trained in simulation. That means modeling aisle geometry, obstacles, rack layouts, reflective surfaces, and lighting variation; along with “what if” scenarios such as blocked aisles, emergency egress conditions, ladders left in place, or spill events. Simulation-first workflows make it possible to validate behavior and edge cases before introducing any new system into a production environment. Skill learning beats hard-coded rules Data centers appear structured, but in practice they are full of variability: temporary cabling, staged parts, mixed-vendor racks, and countless human exceptions. Foundation-model approaches to manipulation are designed to generalize across that messiness far better than traditional rule-based automation, which tends to break when conditions drift even slightly from the expected state. Imitation learning captures tribal knowledge Many operational tasks rely on tacit expertise developed over years in the field, such as how to manage stiff patch cords, visually confirm latch engagement, or stage a

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Applied Digital CEO Wes Cummins On the Hard Part of the AI Boom: Execution

Designing for What Comes After the Current AI Cycle Applied Digital’s design philosophy starts with a premise many developers still resist: today’s density assumptions may not hold. “We’re designing for maximum flexibility for the future—higher density power, lower density power, higher voltage delivery, and more floor space,” Cummins said. “It’s counterintuitive because densities are going up, but we don’t know what comes next.” That choice – to allocate more floor space even as rack densities climb – signals a long-view approach. Facilities are engineered to accommodate shifts in voltage, cooling topology, and customer requirements without forcing wholesale retrofits. Higher-voltage delivery, mixed cooling configurations, and adaptable data halls are baked in from the start. The goal is not to predict the future perfectly, Cummins stressed, but to avoid painting infrastructure into a corner. Supply Chain as Competitive Advantage If flexibility is the design thesis, supply chain control is the execution weapon. “It’s a huge advantage that we locked in our MEP supply chain 18 to 24 months ago,” Cummins said. “It’s a tight environment, and more timelines are going to get missed in 2026 because of it.” Applied Digital moved early to secure long-lead mechanical, electrical, and plumbing components; well before demand pressure fully rippled through transformers, switchgear, chillers, generators, and breakers. That foresight now underpins the company’s ability to make credible delivery commitments while competitors confront procurement bottlenecks. Cummins was blunt: many delays won’t stem from poor planning, but from simple unavailability. From 100 MW to 700 MW Without Losing Control The past year marked a structural pivot for Applied Digital. What began as a single, 100-megawatt “field of dreams” facility in North Dakota has become more than 700 MW under construction, with expansion still ahead. “A hundred megawatts used to be considered scale,” Cummins said. “Now we’re at 700

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Microsoft will invest $80B in AI data centers in fiscal 2025

And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs).  In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023. Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025. Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads. Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.

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John Deere unveils more autonomous farm machines to address skill labor shortage

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Self-driving tractors might be the path to self-driving cars. John Deere has revealed a new line of autonomous machines and tech across agriculture, construction and commercial landscaping. The Moline, Illinois-based John Deere has been in business for 187 years, yet it’s been a regular as a non-tech company showing off technology at the big tech trade show in Las Vegas and is back at CES 2025 with more autonomous tractors and other vehicles. This is not something we usually cover, but John Deere has a lot of data that is interesting in the big picture of tech. The message from the company is that there aren’t enough skilled farm laborers to do the work that its customers need. It’s been a challenge for most of the last two decades, said Jahmy Hindman, CTO at John Deere, in a briefing. Much of the tech will come this fall and after that. He noted that the average farmer in the U.S. is over 58 and works 12 to 18 hours a day to grow food for us. And he said the American Farm Bureau Federation estimates there are roughly 2.4 million farm jobs that need to be filled annually; and the agricultural work force continues to shrink. (This is my hint to the anti-immigration crowd). John Deere’s autonomous 9RX Tractor. Farmers can oversee it using an app. While each of these industries experiences their own set of challenges, a commonality across all is skilled labor availability. In construction, about 80% percent of contractors struggle to find skilled labor. And in commercial landscaping, 86% of landscaping business owners can’t find labor to fill open positions, he said. “They have to figure out how to do

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2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

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OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

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