Global pivot to renewables seen accelerating as Hormuz uncertainty upends energy security

Global efforts to diversify energy sources are set to accelerate as the US-Israel conflict with Iran inflicts an unprecedented disruption on global supplies, analysts said, even as Washington and Tehran reportedly negotiate a reopening of the Strait of Hormuz.

While the two sides have agreed to a two-week ceasefire, they remain at odds over details of reopening the strategic waterway.

Despite the promised pause in hostilities, the conflict has already dealt a massive blow to international energy security, forcing nations to urgently reassess their reliance on volatile supply chains.

Before US President Donald Trump announced the ceasefire on Tuesday, Tehran reportedly proposed a new fee for all commercial vessels transiting the strait once it reopens – a move that could increase the cost of Middle Eastern crude and further incentivise a shift away from the region.

Following the ceasefire announcement, transit numbers did not immediately surge, according to Wednesday’s data from vessel-tracking platform Myvessel.cn, which showed that six vessels had passed through as of the late afternoon.

Fatih Birol, head of the International Energy Agency, underscored the gravity of the situation in an interview with Le Figaro published on Tuesday, stating that the current oil and gas crisis triggered by the blockade was “more serious than the ones in 1973, 1979 and 2022 together”.

Energy crises have repeatedly exposed the economic and strategic vulnerabilities of the global economy’s dependence on fossil fuels, particularly for oil- and gas-poor economies, said Jayendu Krishna, a director at Drewry Maritime Services.

Following a supply disruption of this magnitude, nations will increasingly prioritise energy localisation to insulate themselves from external shocks and enhance the controllability of their power supplies, according to Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University.

“China has already proven that the integration of wind and solar power with energy storage and electric vehicles is a successful path towards greater energy self-reliance,” Lin said.

He suggested that the vast majority of countries could follow this model to reduce the geopolitical risks laid bare by the current war.

Unlike fossil fuel reserves, which are geographically limited, every nation possesses wind and solar potential. Lin added that solar facilities could be constructed in as little as six months, offering significant advantages in both cost-effectiveness and efficiency.

While the primary driver for this shift is now energy security rather than climate goals, Lin noted, the conflict will provide a “massive push” for the energy transition, with carbon reduction serving as a beneficial by-product.

Krishna also said that short-term measures to curtail energy consumption were likely to evolve into long-term structural shifts.

The Middle East has been a cauldron of geopolitics and is likely to remain so even after the war ends, he said.

“The age-old hostility will persist. As a consequence, energy-poor governments will definitely want to ensure energy security of the country. This is likely to push renewable sources of energy, for which there are significant barriers,” he said.

Data from the International Renewable Energy Agency supports this trend.

In a report released last week, the agency said that total renewable power capacity reached 5,149 gigawatts in 2025, with the addition of 692GW, or a 15.5 per cent annual increase.

According to the report, renewables dominated total capacity expansion with an 85.6 per cent share, while non-renewables continued to account for a dwindling portion of new additions.