Military conflict in Iran has disrupted oil shipments through a crucial Middle East waterway, causing energy prices to spike worldwide. The crisis is pushing countries to accelerate their transition to renewable energy sources like solar and wind power.
HANOI, Vietnam (AP) — Military conflict in Iran is highlighting how dependent the world remains on vulnerable fossil fuel supply chains, adding new pressure for nations to accelerate their transition to clean energy sources.
Combat operations have virtually stopped petroleum shipments through the Strait of Hormuz, a critical shipping channel that handles roughly 20% of global oil and liquefied natural gas deliveries. This supply disruption has shaken energy markets worldwide, driving up costs and creating economic pressure for countries that depend on energy imports.
Asian nations, which receive most of their oil through this route, are experiencing the most severe impacts. However, the supply problems are also creating challenges for European leaders seeking to reduce energy consumption and African countries preparing for higher fuel prices and inflation.
What makes this crisis different from past oil supply shocks is that renewable energy has become cost-competitive with traditional fossil fuels in many regions. Data from the International Renewable Energy Agency shows that more than 90% of new clean energy projects launched in 2024 cost less than fossil fuel alternatives.
While petroleum products are essential for industries beyond electricity generation—including fertilizer manufacturing and plastics production—countries with greater renewable energy capacity are experiencing less severe impacts. Clean energy sources depend on local resources like sunlight and wind rather than imported materials.
“These crises regularly occur,” said James Bowen of the Australia-based consultancy, ReMap Research. “They are a feature, not a bug, of a fossil fuel-based energy system.”
China and India, home to more than a billion people each, both face the challenge of producing sufficient electricity for continued economic growth. While both nations have increased renewable energy production, China has implemented these changes on a much larger scale despite continuing to use coal-powered plants.
China now ranks first globally in renewable energy adoption. Data from the International Energy Agency indicates that approximately one out of every ten vehicles in China runs on electricity. Despite remaining the world’s top crude oil importer and largest purchaser of Iranian petroleum, China has reduced its import dependence by electrifying portions of its economy with clean energy.
Without this transition, China would be “far more vulnerable to supply and price shocks,” said Lauri Myllyvirta of the Centre for Research on Energy and Clean Air. China can also draw on stockpiles accumulated during periods of lower prices and alternate between coal and oil for industrial fuel, he explained.
India has also increased clean energy usage, particularly solar power, but has moved more gradually and with less government backing for renewable equipment manufacturing and solar grid integration.
Following Russia’s 2022 invasion of Ukraine, India made energy security a priority by purchasing discounted Russian petroleum and increasing coal production. The country also expanded solar and wind capacity, which has helped cushion supply disruptions without completely avoiding them, according to Duttatreya Das of the think tank Ember.
“Everyone cannot be China,” Das said.
India now confronts a cooking gas shortage that has sparked increased purchases of induction cooktops and raised concerns about restaurant closures. The fertilizer and ceramics sectors may also face difficulties.
This energy crisis is not unfamiliar to wealthy nations in Europe and East Asia.
During 2022, some European governments attempted to reduce fossil fuel dependence. However, many quickly shifted focus to securing new fossil fuel suppliers instead, according to Pauline Heinrichs, who researches climate and energy at King’s College London.
Germany moved quickly to construct LNG terminals for replacing Russian gas with primarily American fuel, while the energy transition, including demand reduction efforts, lost momentum, she noted.
According to a 2023 analysis, Europe’s additional fossil fuel spending since the Russia-Ukraine conflict equaled roughly 40% of the investment required to convert its power system to clean energy.
“In Europe, we learned the wrong lesson,” Heinrichs said.
In import-reliant Japan, policy responses to previous energy shocks have concentrated on diversifying fossil fuel sources rather than investing in domestic renewable energy, said Ayumi Fukakusa of Friends of the Earth Japan.
According to Ember data, solar and wind account for only 11% of Japan’s energy production, matching India’s level but trailing China’s 18%. Japan’s overall energy consumption is significantly lower than both countries.
The Iran conflict dominated discussions during Japanese Prime Minister Sanae Takaichi’s meeting this week with U.S. President Donald Trump. Trump, who has consistently encouraged Japan to purchase more American LNG, recently called on allied nations like Japan to “step up” in helping secure the Strait of Hormuz.
South Korean President Lee Jae-myung described the crisis as potentially “a good opportunity” to accelerate the shift toward renewable energy.
Developing nations in Asia and Africa are competing with wealthy European and Asian countries and major buyers like India and China for limited gas supplies, driving prices higher.
Import-dependent economies—including Benin and Zambia in Africa and Bangladesh and Thailand in Asia—may experience some of the most severe impacts. Expensive fuel increases transportation and food costs, and many countries have limited foreign-exchange reserves, restricting their ability to pay for imports if prices remain elevated.
Africa may face particular vulnerability because many nations depend on imported oil for transportation and supply chains.
Building long-term energy security through cleaner energy investments makes strategic sense for African countries, said Kennedy Mbeva, a research associate at the Centre for the Study of Existential Risk at the University of Cambridge.
However, not all are choosing renewables: South Africa is exploring construction of an LNG import facility and new gas-powered plants.
Others, like Ethiopia which prohibited gasoline and diesel vehicles in 2024 to promote electric cars, are increasing their renewable energy commitment.
The true challenge extends beyond surviving the next crisis to ensuring it doesn’t “derail the country’s development trajectory,” said Hanan Hassen, an analyst at Ethiopia’s government-linked think tank, the Institute of Foreign Affairs.
Greater renewable energy adoption has helped protect some Asian countries from the energy crisis.
Pakistan’s solar expansion has prevented more than $12 billion in fossil fuel imports since 2020 and could save an additional $6.3 billion in 2026 at current prices, according to think tanks Renewables First and the Centre for Research on Energy and Clean Air.
Vietnam’s existing solar capacity will help the country avoid hundreds of millions of dollars in potential coal and gas imports over the next year, based on current elevated prices, according to the research group Zero Carbon Analytics.
Other nations are managing limited supplies carefully.
Bangladesh has shuttered universities to conserve electricity. With limited storage capacity to handle supply disruptions, the government implemented fuel rationing following a surge of panic buying at gas stations, said Khondaker Golam Moazzem, an economist with the Centre for Policy Dialogue in Dhaka.
Currently, governments must focus on managing shortages and controlling prices. Thailand has halted petroleum exports, increased domestic gas production, and started using reserves.
If the conflict continues into April, Thailand’s limited reserves and constrained subsidy budget mean prices will rise sharply, warned Areeporn Asawinpongphan, a research fellow with the Thailand Development Research Institute.
“The time for promoting domestic renewables should have happened a long time ago,” Asawinpongphan said.
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