The war in Iran is reshaping global energy planning as disruptions to oil and liquefied natural gas shipments through the Strait of Hormuz ripple across continents, raising prices and intensifying pressure on governments that depend on imported fuel. The Strait of Hormuz carries about a fifth of the world’s oil and LNG, and fighting has all but halted oil exports through the narrow waterway, jolting energy markets and straining import-dependent economies, the Associated Press reported on Thursday.
As the shock spreads, Asia has been hit hardest because much of the oil was headed there, but the effects also extend into Europe and Africa. Europe’s policymakers have been looking at ways to cut energy demand, while African countries are bracing for rising fuel costs and inflation as they compete with wealthier economies and large buyers for limited gas supplies.
AP’s analysis points to a difference between past crises and the current moment: renewable power is increasingly competitive with fossil fuels in many places. The International Renewable Energy Agency said that more than 90% of new renewable power projects worldwide in 2024 were cheaper than fossil-fuel alternatives, a benchmark several experts cited as a shift in the economics of the transition.
Multiple analysts also argued that the structure of fossil-fuel supply chains leaves countries exposed when routes are disrupted. “These crises regularly occur,” James Bowen of the Australia-based consultancy ReMap Research said. “They are a feature, not a bug, of a fossil fuel-based energy system.” Bowen’s view was echoed in the broader framing that renewables—powered by domestic resources like sun and wind—can reduce dependence on imported fuels during periods of conflict.
China and India face a similar energy-demand challenge—generating enough electricity for growth for more than a billion people each—while managing exposure to price and supply shocks. AP said China built renewable buffers on a larger scale than India, even as it continues to rely heavily on coal. It also reported that electrifying parts of China’s economy with renewables has reduced reliance on imports and that, without such a shift, China would be “far more vulnerable to supply and price shocks,” said Lauri Myllyvirta of the Centre for Research on Energy and Clean Air.
India has expanded clean energy use, especially solar power, but AP reported that it has done so more slowly and with less government support for manufacturing renewable energy equipment and for connecting solar to the power grid. After Russia’s invasion of Ukraine in 2022, India prioritized energy security by buying discounted Russian oil and boosting coal production, AP said; those steps helped cushion disruptions but did not avoid them entirely, according to Duttatreya Das of the think tank Ember. “Everyone cannot be China,” Das said, pointing to differences in industrial capacity and policy choices across countries.
The energy shock also appears to be shaping short-term household and industry pressures, according to AP. The report said India is facing a shortage of cooking gas, driving a rush to buy induction cooktops and raising fears of restaurant shutdowns, and that fertilizers and ceramics industries could also be hit.
In Europe and parts of East Asia, the crisis is reviving debate over how governments respond to energy shocks. AP said some European governments tried to cut dependence on fossil fuels in 2022, but later shifted toward finding new fossil fuel suppliers. It reported that Germany rushed to build LNG terminals to replace Russian gas with mostly American fuel while the energy transition—along with efforts to cut demand—slowed, according to Pauline Heinrichs of King’s College London. “In Europe, we learned the wrong lesson,” Heinrichs said.
In import-dependent Japan, AP reported that policy responses to past shocks have focused on diversifying fossil fuel imports rather than investing in domestic renewables. It said solar and wind make up just 11% of Japan’s energy production, citing Ember, and that Japan’s energy use is lower than both China’s and India’s. The report also said the Iran war featured in discussions this week between Japan’s Prime Minister Sanae Takaichi and U.S. President Donald Trump, with Trump urging allied nations such as Japan to “step up” in assisting secure the Strait of Hormuz. South Korean President Lee Jae-myung said the crisis could be “a good opportunity” to shift faster to renewable energy.
AP’s analysis said poorer countries in Asia and Africa may be especially exposed because they compete with wealthy economies and big buyers for limited gas supplies, pushing up prices. It reported that import-dependent economies such as Benin and Zambia in Africa and Bangladesh and Thailand in Asia could face some of the biggest shocks, with costly fuel raising transport and food expenses and with limited foreign-exchange reserves restricting the ability to pay for imports if prices stay high.
The report also described how some countries are responding differently. AP said African countries have strategic reasons to invest in cleaner energy, but not all governments are opting for renewables. It reported that South Africa is considering building an LNG import terminal and new gas-fired power plants, while Ethiopia—AP said it banned gasoline and diesel fueled cars in 2024 to promote electric vehicles—is doubling down on renewables. “The real challenge is not just to withstand the next shock, but to ensure it doesn’t ‘derail the country’s development trajectory,’” Hanan Hassen, an analyst at Ethiopia’s government-linked think tank the Institute of Foreign Affairs, said.
Where renewable expansion has already occurred, AP said it has helped cushion some countries from the worst effects of the supply disruption. The report said Pakistan’s solar boom has preempted more than $12 billion in fossil fuel imports since 2020 and could save another $6.3 billion in 2026 at current prices, citing Renewables First and the Centre for Research on Energy and Clean Air. It also said Vietnam’s solar generation is expected to help save hundreds of millions of dollars in potential coal and gas imports in the coming year, based on high prices, citing Zero Carbon Analytics.
For other governments, AP reported that the immediate focus has been crisis management—managing shortages and controlling prices—rather than long-term transitions. It said Bangladesh has closed universities to save electricity and started rationing fuel after panic buying at filling stations, citing Khondaker Golam Moazzem of the Centre for Policy Dialogue in Dhaka. In Thailand, AP said authorities suspended petroleum exports, boosted gas production and began drawing on reserves, while warning that if the conflict bleeds into April, prices could rise sharply because reserves are finite and subsidy budgets are limited, according to Areeporn Asawinpongphan of the Thailand Development Research Institute. “The time for promoting domestic renewables should have happened a long time ago,” Asawinpongphan said.