Iran Conflict Reshapes Global Energy and Market Power Trends

Key Moments

Roughly 20% of global oil and LNG flows have been disrupted at the Strait of Hormuz, triggering what is described as the largest energy-supply shock on record.
The United States has solidified its status as a leading global energy supplier, briefly surpassing Saudi Arabia as the top oil exporter during the conflict while remaining the dominant LNG shipper.
Clean energy’s share of total global energy use remains at 20% or less, even as fossil fuels continue to account for about 80% of overall consumption.

Global Supply Shock Ripples Through Economies

The U.S.-Israel war with Iran has triggered a massive disruption in energy flows, with around 20% of the world’s oil and liquefied natural gas (LNG) supplies cut off at the Strait of Hormuz. The resulting bottleneck is reverberating across regions and sectors, from fuel rationing in Bangladesh and fertilizer shortages for African farmers to higher gasoline costs for U.S. consumers.

While the immediate crisis will eventually ease, its aftershocks are expected to reshape both global geopolitics and the energy system well beyond the current conflict. What is not changing is the world’s appetite for power. Global electricity demand is rising at close to 4% per year, propelled by demographic growth, electrification trends, and the expansion of AI-focused data centers. Overall energy consumption continues to climb even as the sources and suppliers evolve.

The U.S. Ascends as a Dominant Energy Power

Before 2015, U.S. crude exports were largely prohibited as a remnant of the 1970s Arab oil embargo, and the country lacked the facilities to export natural gas. The shale revolution reversed that position. Within a brief window slightly more than a decade ago, the United States shipped its first cargoes of both crude oil and LNG, beginning a rapid transformation from a major energy importer to a central pillar of global supply.

Today, the U.S. is firmly established as a leading energy exporter. It is already the clear frontrunner in LNG shipments worldwide and, during the war, even temporarily overtook Saudi Arabia as the top oil exporter. Market participants expect that prominence to deepen in the aftermath of the conflict.

Metric	Value	Source
Share of global oil and LNG flows disrupted at Strait of Hormuz	20%	IEA; U.S. EIA
Annual increase in global power demand	4%	IEA; U.S. EIA

Few industry figures have watched this shift as closely as Charif Souki, who founded Cheniere Energy in 1996, the company that became the first U.S. LNG exporter and now ranks No. 223 on the Fortune 500. Although Souki is no longer with the company, Cheniere remains a leading force in the sector.

“We finally have assumed our role as the energy superpower,” Souki told Fortune. “And that’s here to stay. That’s not going to change. It’s going to dictate how the rest of the world functions.”

Renewables Expand, but Coal Sees a Short-Term Revival

The war has accelerated investment in renewable energy, with governments moving faster to add wind and solar capacity. Nuclear power is also expected to benefit from renewed interest. At the same time, coal – the most carbon-intensive major fuel – has experienced a comeback in several markets.

Countries including India, South Korea, Indonesia, Thailand, Vietnam, and the Philippines have increased coal-fired power generation since February. Souki notes a key motivation: “They have the coal, and they don’t have to beg anybody for it,” he said. “People are going to use coal regardless of environmental issues, because that’s what they have.”

This pivot toward coal is largely a stopgap measure, focused on extending the operational life of existing coal plants rather than launching a new wave of construction. A similar pattern is unfolding in the United States, where Trump administration subsidies are supporting coal use to power AI data centers.

On the supply side of electricity generation, clean energy technologies – wind, solar, nuclear, and hydro – now account for close to 40% of global power output. However, when broader energy consumption is considered, including transportation, heating, and industrial usage, clean energy’s share drops to 20% or less. Fossil fuels still contribute roughly 80% of the global energy mix, with oil and coal maintaining their roles and natural gas continuing to expand.

EV Momentum Meets Persistent Oil Dependence

The conflict has coincided with a pickup in electric vehicle adoption. In Europe, EV sales have climbed about 40% since the war started, rising to roughly one-third of new car registrations. In China, EVs now represent more than half of new vehicle sales, and the global average has reached 25% and is increasing. Investment in sustainable aviation fuel is also expected to rise in response to jet fuel shortages.

Whether these developments translate into a sustained global shift away from internal combustion engines remains uncertain. Worldwide oil demand is still growing, though at a slower pace, and is expected to level off around 2030. That plateau could arrive earlier, but market watchers do not anticipate a sharp drop in demand. For the foreseeable future, transportation systems – across air, rail, and road – are projected to rely heavily on oil. By value, oil remains the most heavily traded commodity globally, with natural gas a distant second.

In the United States, EVs account for less than 10% of new car sales. Bob McNally, former White House energy advisor under George W. Bush and founder of Rapidan Energy Group, questions whether the current turmoil will fundamentally transform behavior.

“Some people are saying this oil-price spike will do what the Paris Agreement and EV mandates haven’t,” McNally told Fortune, “which is to convince everybody to destroy demand for gasoline.

“But busts follow booms,” he added. “When oil prices drop, I think demand for EVs will wane. You’re on this roller coaster of oil prices.”

Fractures in the Traditional Oil Cartel System

The onset of the war saw Iran respond under pressure by striking neighboring members of the Gulf Cooperation Council (GCC), a 45-year-old group of hydrocarbon-rich monarchies that includes Saudi Arabia, Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates.

The UAE has since announced it is leaving the Organization of the Petroleum Exporting Countries (OPEC). Once this takes effect, only Saudi Arabia and Kuwait will belong to both the GCC and OPEC. The UAE’s move reflects tensions with Iran and disputes with Saudi Arabia, but also a broader dissatisfaction with output limits that constrained its production ambitions.

After the UAE’s exit, the 65-year-old cartel will continue with its five original members – Iran, Iraq, Venezuela, Saudi Arabia, and Kuwait – alongside six African oil producers. The departure strengthens the GCC’s alignment with the United States but may also lead to more volatility in oil prices. OPEC was originally formed to enable producing nations to exert greater authority over their resources after years of Western corporate and governmental dominance. Recent U.S. strikes on Iran and Venezuela, both within a 60-day span, highlight the persistent intersection of oil, sovereignty, and conflict.

GCC states are actively seeking to reduce their reliance on the Strait of Hormuz, exploring alternative transit routes and investing in new pipelines. Saudi Arabia’s East-West Crude Oil Pipeline has already enabled the kingdom to channel more exports through the Red Sea, helping to moderate price spikes.

“They are not going to stay vulnerable to blackmail very long,” Souki said. “Everybody is going to work very hard at figuring out alternative sources. In five years, it won’t be recognizable.”