Six months into the US-Iran war, disruptions to oil and gas supplies are reshaping global energy markets, putting strategic reserves under pressure and accelerating renewable energy adoption in several regions.
Six months of the US-Iran war: an energy sector assessment
On August 28, the US-Iran war entered its seventh month. The Middle East conflict launched by the United States and Israel has produced sometimes unexpected consequences for global energy markets, while influencing domestic energy policies around the world. After six months of war, a broader trend has emerged: hostilities and disruptions to energy supplies appear to be accelerating the adoption of clean technologies in several regions, even as coal consumption has increased elsewhere.
US-Iran war drives new momentum for renewable energy
According to a recent report by BloombergNEF, Chinese exports of clean energy equipment have risen sharply, and the increase appears increasingly linked to the conflict. China is the world’s largest manufacturer of solar modules, electric vehicles and batteries. While Chinese exports initially benefited from changes to a major export subsidy, the trend has since gained momentum. China has now recorded five consecutive months of record exports.
As happened during South Africa’s 2022 energy crisis and after Nigeria removed fuel subsidies in 2023, the US-Iran war has boosted demand for solar power, the report said. African imports of Chinese solar equipment rose 37% in the first half of 2026 compared with the same period a year earlier, the strongest increase of any region worldwide.
Unlike previous demand surges, which were largely concentrated in individual countries, the current expansion is spreading across the continent, from South Africa and Nigeria to the Democratic Republic of Congo, Egypt and Morocco. Governments and households are seeking to reduce their exposure to fuel price shocks and increasingly see solar power as a cleaner and more affordable alternative.
China, meanwhile, has cushioned the impact of the energy crisis by putting national energy security at the center of its policies. Larger strategic reserves and increased domestic gas production have reduced its reliance on imports, helping stabilize global markets. At the same time, the rapid expansion of renewable energy, alongside continued coal use, has allowed China to maintain a high degree of self-sufficiency in electricity generation.
Electric vehicle sales have surged in Brazil and Australia, while Thailand, a major LNG buyer, has adopted more ambitious long-term renewable energy targets. The Philippines has also experienced a sharp increase in rooftop solar installations.
Global oil supplies and reserves remain under pressure
Despite early forecasts about the consequences of disruptions in the Strait of Hormuz, oil prices have not reached $200 a barrel, or even $150.
Several mitigating factors have helped contain prices. Some import-dependent countries have reduced consumption, while the United States and other governments have drawn on strategic reserves and increased domestic production. China, the world’s largest crude oil importer, has also cut its purchases, relying instead on the large inventories it accumulated before the conflict.
While the market is still searching for a new equilibrium, uncertainty surrounding the Middle East war, combined with damage to refineries including those in Russia, continues to keep the cost of refined fuels such as gasoline and diesel elevated.
The Strait of Hormuz is becoming less central to global energy markets
The Strait of Hormuz will remain a critical energy transit route, but its importance to global oil and gas markets is likely to decline.
Disruptions to shipments have accelerated investment in alternative pipeline projects. The United Arab Emirates, for example, has stepped up construction of a pipeline that would allow the country to double its export capacity through the port of Fujairah, bypassing Hormuz.
Iraq has also prioritized plans to reduce its dependence on the strait, although none of these projects would necessarily be protected from potential Iranian attacks.
Six months into the conflict, the war remains in a fragile stalemate. Ships are still moving through Hormuz, but traffic remains below prewar levels and vessels are following different routes.
According to the latest International Energy Agency report, disruptions in the strait are expected to result in a 4.3 million barrel-per-day reduction in global production this year. Strategic reserves are being depleted rapidly, while refining margins for diesel, gasoline and jet fuel are at extremely low levels. Global oil demand is expected to fall by 1.6 million barrels per day.
The growing use of drones, including attacks targeting energy infrastructure across the Middle East and Russia, is also reshaping energy markets and represents a serious threat to energy security.
How the US-Iran war has affected Europe’s energy transition
Europe has proved better prepared to withstand natural gas price shocks than it was when Russia invaded Ukraine in 2022. Renewable sources now provide 35% of electricity across Europe’s five largest power markets, up from 24% in 2021. That expansion has helped limit the impact of the crisis on electricity prices.
European policymakers, however, have generally focused more on shielding consumers from rising energy costs than on accelerating the energy transition. Such measures risk weakening incentives to reduce fossil fuel demand while placing additional pressure on public finances.
Germany is the main exception. In response to the war, the country increased its planned onshore wind auction volumes by 12 GW.
BloombergNEF expects markets to maintain or strengthen their renewable energy ambitions as governments increasingly view clean energy investment not only as a climate policy tool, but also as a way to improve economic resilience and reduce exposure to future energy shocks.
