Iran War Disrupts Global Energy: How the Strait of Hormuz Blockade Is Accelerating the Shift from Fossil Fuels

For nearly five decades, climate experts have agreed on a single solution to global warming: eliminate fossil fuels like coal, oil, and natural gas. Despite global political efforts to phase out these fuels, they still account for roughly 80% of the world’s energy supply. However, the war in Iran—launched by the United States and Israel two months ago—may be the catalyst that finally dislodges fossil fuels from their dominant position in the global energy system.

The conflict has led to the ongoing blockade of the Strait of Hormuz, a critical waterway near Iran through which 20% of the world’s oil and natural gas passes. Since early March, the strait has been closed with no immediate resolution in sight, creating the most severe energy crisis in modern history. At least 25 countries now report critical shortages of road fuel, jet fuel, or heating oil.

Unlike the oil shocks of the 1970s, when alternatives to fossil fuels were too costly or underdeveloped to scale, this disruption is occurring at a time when renewable energy sources are increasingly competitive. Costs for renewables have plummeted in recent years, offering nations new energy options.

"We now have a viable alternative. Renewables have changed the equation." — Selwin C. Hart, Special Adviser to the United Nations Secretary-General

Uncertainty Remains Despite Renewable Progress

While the energy landscape is shifting, it remains unclear how the global system will adapt. The reliability of a significant portion of the world’s oil and natural gas supply is now uncertain, but renewables may not fully replace the lost energy. Coal, the most polluting fossil fuel, is regaining appeal as nations desperate to replace natural gas for electricity turn to it. Additionally, solar and wind power struggle to match the continuous energy output provided by fossil fuels.

"It’s hard to say which direction things will go." — Daan Walter, Lead Researcher at Ember

Two months into the conflict, the winners and losers in the global energy transition are becoming clearer. As prices surge and supplies dwindle, countries are reassessing their energy futures. Some nations are reverting to dirty fuels to fill the gaps left by the Strait of Hormuz closure, while others are accelerating investments in clean energy to break free from a century-long dependence on fossil fuels.

Winners and Losers in the Energy Shift

Losers: Oil and Natural Gas

The blockade has devastated oil and natural gas markets. Iraq, for example, has resorted to exporting oil via tanker trucks through Syria, with officials reporting a 70% drop in oil revenue in March. The disruption underscores the fragility of fossil fuel-dependent economies in the face of geopolitical conflicts.