Since the initial US-Israel strikes on Iran, the fast-moving situation has evolved rapidly and with numerous effects. It is unclear how it will further develop or the duration of the conflict and of its impacts. War may have unintended consequences and in this briefing we analyse the current dynamics and possible implications of the US-Israel strikes and regional conflagration on Iran for global energy security and the energy transition.
Read the full briefing for more analysis on each of the key points below.
This is a chokepoint disruption that can evolve into a supply shock
Unlike the Russia–Ukraine crisis in 2022, the current crisis initially disrupts the transport of energy rather than production itself. Roughly 20% of global oil trade and around 20% of LNG shipments transit the Strait of Hormuz, concentrating multiple exporters behind a single maritime corridor. If the disruption persists, however, the logistics shock can quickly translate into a global supply shock.
Duration determines whether this becomes a market shock or a systemic crisis
A short disruption initially produces financial and insurance risk premia, pushing oil sharply higher and tightening LNG markets while most physical supply continues to reach markets. As disruption persists, markets begin to price in physical availability constraints, with oil moving above $100/bbl, LNG markets becoming extremely tight, and macroeconomic spillovers comparable to the early phase of the 2022 energy crisis.
Oil and LNG price shocks will be global, but physical shortages may be regional
Oil trades in a highly integrated global market, meaning disruption in the Strait of Hormuz would quickly translate into higher prices worldwide. LNG prices would also rise globally as Asian and European importers compete for cargoes, but the most import-dependent countries, particularly lower-income LNG buyers, face the greatest risk of physical shortages or being priced out of the market.
The crisis reinforces the structural vulnerability of the fossil fuel system
Global hydrocarbon reserves are abundant, but production and transport remain concentrated in geopolitically contested regions and maritime chokepoints. Expanding fossil fuel supply alone does not eliminate this vulnerability, because additional production must still move through the same fragile logistics networks and political fault lines. As a result, disruptions in a few strategic corridors can rapidly translate into global price shocks, geopolitical leverage and macroeconomic instability.
Energy security and the energy transition are becoming increasingly intertwined
In the short term, energy price shocks can create political pressure to expand fossil production or subsidise energy consumption. Over the medium term, however, repeated geopolitical disruptions tend to strengthen the strategic case for efficiency, electrification, and domestic clean energy systems, thereby reducing exposure to volatile global fuel markets. In this sense, energy transition policies increasingly function as economic resilience and national security strategies.
Policy response should stabilise markets now while reducing structural vulnerability
Governments should prioritise stabilising markets through strategic stock signalling, liquidity support for utilities and demand management. At the same time, any crisis response should accelerate the reduction of structural vulnerabilities through efficiency, electrification, rapid grid connection of renewables, and system flexibility, thereby reducing long-term exposure to fossil fuel trade disruptions.
Read the full briefing for more analysis on each of these key points.
