The geopolitical calculus of energy security has taken a sharp turn. Reports of US military strikes on Iranian infrastructure have sent tremors through global markets, but paradoxically, crude prices are sliding on tentative hopes of de-escalation. For a planet already grappling with energy transition inertia, this volatility is not merely a market wobble; it is a systemic stress test.
Let us examine the physics of supply disruption. Iran sits atop the world's fourth-largest proven oil reserves, and any military action targeting its export capacity directly impacts the Strait of Hormuz. This chokepoint funnels about 20% of global petroleum consumption. A 24-hour closure would remove roughly 17 million barrels per day from the market. Current Brent crude futures, however, have slipped 3.2% in early trading, a reaction analysts attribute to diplomatic backchannels and a potential ceasefire window.
This disconnect between kinetic reality and market pricing is dangerous. The International Energy Agency's emergency stockpiles hold about 1.5 billion barrels, but releasing them would only buffer a short-term spike. The real risk is a prolonged supply constriction that amplifies inflationary pressures already squeezing economies from London to Lagos.
Energy transition advocates might see this as an accelerator for renewables. But history warns otherwise. The 1973 oil embargo did not spur a rapid shift; it deepened fossil fuel dependence through efficiency gains and offshore drilling. A sudden price shock today could delay investment in solar and wind, as governments prioritise immediate supply security over climate goals.
The US Strategic Petroleum Reserve currently holds 375 million barrels, a 40-year low. A sustained conflict would force rationing or strategic releases that deplete this buffer. For context, the 1990 Gulf War saw prices double in three months. Today's more interconnected financial system amplifies those risks through commodity derivatives and currency fluctuations.
Behind the headlines, there is a quieter catastrophe. The planet's energy infrastructure is brittle. A 5% supply drop can cause a 20% price surge due to inelastic demand. This is not an abstraction; it is the arithmetic of scarcity. Meanwhile, carbon emissions continue their relentless rise, hitting a record 37.4 billion tonnes in 2024. The strikes may be localised, but their thermodynamic consequences are global.
The question is not whether oil will spike, but whether the shock will catalyse or cripple the energy transition. Current signals are mixed. Electric vehicle sales rose 35% in the first quarter, but global oil demand also grew 1.4 million barrels per day. The inertia of the fossil fuel system is immense. A geopolitical jolt could either break that inertia or lock it in.
We must calibrate our responses with scientific rigour. Every barrel burned adds 0.00043 tonnes of CO2 to the atmosphere. A 10 million barrel supply disruption avoided via peace would spare 4,300 tonnes of emissions. But if conflict spurs a dash for new drilling, those avoided emissions are mere decimals in the ledger of biosphere collapse.
As I file this report, the situation remains fluid. Calm urgency dictates that we model both the market volatility and the carbon cost. The former is a financial crisis; the latter is an existential one. Let us not mistake a price slide for a policy win.
