Six months of the US war with Iran have reshaped global energy markets, putting oil supplies and strategic reserves under pressure while accelerating demand for renewables in several regions.
Energy sector after six months of US war with Iran
On 28 August, the US war with Iran entered its seventh month. The conflict in the Middle East launched by the United States and Israel has had sometimes unexpected effects on global energy markets, influencing domestic policy in countries around the world in multiple ways.
After six months of war, a view has emerged and gradually strengthened that hostilities and disruptions to energy supply routes are helping drive the adoption of clean energy technologies across several regions, although coal consumption has also increased in some markets.
Energy sector after six months of US war with Iran: renewables gain momentum
First, according to a recent report by BloombergNEF, Chinese exports of clean energy equipment have recorded significant increases, with growing evidence that the trend is linked to the conflict.
China is the world’s largest manufacturer of solar modules, electric vehicles and batteries. While the initial rise in Chinese exports benefited from changes to a major export subsidy, the trend now appears to have become more established. China has recorded five consecutive months of record exports.
As seen during South Africa’s 2022 energy crisis and following the removal of subsidies in Nigeria in 2023, the US war with Iran has stimulated demand for solar energy, the report said.
African imports of Chinese solar equipment increased by 37% in the first half of 2026 compared with the same period a year earlier, the highest growth rate recorded globally over the period.
Unlike previous demand booms, which were largely concentrated in individual countries, the current expansion appears to extend across the continent, from South Africa and Nigeria to the Democratic Republic of the Congo, Egypt and Morocco. Governments and consumers have responded by seeking to reduce their exposure to fuel price shocks, increasingly turning to solar power as a cleaner and more affordable alternative.
China has cushioned the impact of the energy crisis by placing national security at the centre of its policies. Larger strategic reserves and increased domestic gas production have reduced its reliance on imports, helping stabilise global markets. At the same time, the rapid expansion of renewables, alongside coal, has enabled the country 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, meanwhile, has recorded a sharp increase in rooftop solar installations.
Global oil supplies and strategic reserves remain under pressure
Despite forecasts about the potential impact of the Strait of Hormuz blockade, oil prices have not reached $200 per barrel, or even $150.
Several mitigating factors appear to have prevented such an extreme surge. Some import-dependent countries have reduced consumption, while the United States and other countries have drawn on strategic petroleum reserves and increased domestic production.
Another important factor has been China. The world’s largest oil importer has reduced its purchases, drawing instead on substantial reserves accumulated before the conflict.
Although the market is still searching for a new equilibrium, uncertainty surrounding the war in the Middle East, combined with damage to refineries, including in Russia, continues to keep the cost of refined fuels such as petrol and diesel elevated.
The Strait of Hormuz is becoming less central to energy markets
The Strait of Hormuz will remain a crucial transit route, but its importance to global oil and gas markets is expected to gradually decline.
Disruptions to energy flows have encouraged investment in alternative pipeline projects. The United Arab Emirates, for example, has accelerated construction of a pipeline that will allow the country to double its export capacity through the port of Fujairah, bypassing Hormuz.
Iraq has also prioritised plans to reduce its reliance on the Strait, although none of these projects would necessarily be protected from Iranian attacks.
Six months into the conflict, the war has entered a fragile stalemate. Ships are still passing through Hormuz, but traffic remains below pre-conflict levels and vessels are using different routes.
According to the latest report from the International Energy Agency, the Strait’s disruption is 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, petrol and aviation fuel are at low levels. Global demand is estimated to decline by 1.6 million barrels per day.
The growing use of drones, including attacks against energy infrastructure in the Middle East and Russia, is also affecting energy markets and represents a serious threat to energy security.
How the conflict has affected Europe’s energy transition
Europe appears better prepared to withstand gas price shocks than it was when Russia invaded Ukraine in 2022.
Renewable energy sources now provide 35% of energy across Europe’s five largest electricity markets, up from 24% in 2021. This has helped cushion the impact of the crisis on electricity prices.
European policymakers, however, have focused more heavily on protecting consumers from rising 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, having increased onshore wind auction volumes by 12 GW in response to the war.
BloombergNEF forecasts suggest that markets will maintain or strengthen their renewable energy ambitions as governments seek to improve economic resilience in the face of geopolitical and energy supply risks.
