The war involving Iran, the United States and Israel is exposing the risks of the global economy’s heavy reliance on fossil fuels, challenging the political case made by Donald Trump for doubling down on oil and gas production.
The conflict has triggered major disruptions in global energy markets, echoing the shock that followed the Russian invasion of Ukraine in 2022. Together, the two crises have highlighted how geopolitical conflict can rapidly destabilize oil and gas supplies, raising questions about whether long term energy security can continue to rely on fossil fuels.
Strait of Hormuz Disruption
The latest turmoil centers on the closure of the strategically critical Strait of Hormuz, one of the world’s most important energy corridors. Roughly one fifth of global oil and gas shipments normally pass through the narrow waterway, making it a vital artery for the global economy.
The disruption initially pushed global oil prices sharply higher, with Brent crude briefly reaching $119 per barrel earlier in the week. Although prices later eased to around $90, they remain significantly above pre war levels, reflecting persistent concerns about supply shortages.
For many economies, particularly in Asia, the impact has been severe. Countries across the region rely on the Middle East for a large share of their energy imports, making them especially vulnerable to supply disruptions stemming from geopolitical tensions.
Renewed Debate Over Energy Security
The crisis is reigniting debates about the balance between energy security and climate policy. After the signing of the Paris Climate Agreement in 2015, governments around the world accelerated investments in renewable energy while gradually reducing spending on fossil fuels.
However, the energy shock triggered by Russia’s war in Ukraine revealed the dangers of relying heavily on imported fossil fuels. European nations, long dependent on Russian gas, were forced to scramble for alternative supplies when deliveries collapsed.
In response, many governments adopted a more pragmatic strategy. While some accelerated the deployment of solar and wind power, others increased domestic production of gas and coal. Major energy consumers such as China and India embraced a broad “all of the above” approach that includes both fossil fuels and renewable energy.
Despite rapid growth in renewables, oil and gas remain central to the global energy system. According to the Energy Institute, fossil fuels still account for nearly 60 percent of global energy demand, underscoring the difficulty of transitioning away from them quickly.
Trump’s Energy Dominance Strategy
Since returning to office, President Donald Trump has promoted a policy of American “energy dominance,” seeking to expand domestic oil and gas production while scaling back federal support for renewable energy development.
The administration has also criticized the concept of net zero emissions, which refers to balancing greenhouse gas emissions with the amount removed from the atmosphere. At a recent meeting of the International Energy Agency, U.S. Energy Secretary Chris Wright described net zero targets as a “destructive illusion,” arguing that aggressive climate policies could impose unnecessary costs on consumers already struggling with inflation.
Transitioning to a low carbon energy system indeed requires massive investment. According to the International Renewable Energy Agency, annual global spending on renewable energy must reach roughly $1.4 trillion by 2030, more than double the level recorded in 2024. The International Energy Agency also estimates that investment in electricity grids alone must increase by around 50 percent within the same period.
Energy Shocks and the Future of the Transition
The current crisis illustrates both the challenges and the opportunities facing the global energy transition. On one hand, fossil fuels remain deeply embedded in the world economy, making a rapid shift to renewable energy unrealistic in the near term.
On the other hand, the vulnerability of oil and gas supply chains has become increasingly clear. A single geopolitical confrontation affecting a narrow maritime corridor only 39 kilometers wide has been able to disrupt global energy markets and threaten economic stability.
For many governments, the lesson is likely to be that energy security requires diversification. Expanding domestic energy production, whether through renewable power or local fossil fuel resources, can reduce exposure to geopolitical disruptions.
Analysis
The latest Middle East conflict underscores a fundamental tension in global energy policy. Governments must simultaneously address climate change while ensuring reliable and affordable energy supplies for their economies.
Ironically, the geopolitical shocks associated with fossil fuels may end up accelerating the very energy transition that critics argue is too expensive or unrealistic. Countries seeking to insulate themselves from external supply disruptions may find that expanding domestic renewable energy offers a strategic advantage as well as environmental benefits.
In this sense, the war involving Iran, the United States and Israel may mark another turning point in the global energy debate. Rather than reinforcing the dominance of fossil fuels, the crisis could strengthen the argument that long term energy security depends on building a more diversified and resilient energy system.
With information from Reuters.
