The US–Israel war on Iran, which erupted at the end of February, triggered a global energy crisis. More than a hundred days in, the parties signed an interim deal and markets have reacted positively, with oil and gas prices falling sharply. Lingering doubts about the deal’s durability, fuelled by continued exchanges of strikes and threats, combined with damage to gas production infrastructure, shipping uncertainty, elevated insurance costs, and the time needed to clear mines from the Strait will keep prices volatile and importers on edge.
However, the far more significant consequence of this war, coming only four years after the last energy crisis, is the loss of trust in the reliable flow of oil and gas. Importing countries are reckoning with this dependency, increasingly questioning the economic and national security logic of fossil fuel imports. Narratives and policies have shifted decisively in favour of renewables. The timing of this energy crisis matters as much as the crisis itself. It is happening at a uniquely pivotal moment, when the conditions for an energy transition are more favourable than during any previous energy shock. Three reasons explain why the Iran war marks an inflection point in the global energy transition.
Please find the full policy paper by Abdullah Fahimi here.
