The energy shock triggered by the war on Iran is poised to drive lasting changes in the structure of the global multitrillion-dollar oil market, transforming what was once a relatively open system into a more fragmented and weaponized landscape.
Oil prices have surged significantly since the outbreak of the war, rising by around 50% compared to pre-war levels.
At the same time, prices in the physical oil market have reached record highs, as countries and companies compete for increasingly limited supplies. A key factor behind this surge is Iran’s continued closure of the strategic Strait of Hormuz, a vital artery for global energy flows.
Daniel Yergin described the current crisis as “the mother of all supply chain disruptions.”
According to available data, the disruption linked to the Iran war has removed approximately 16% of global oil supply, surpassing previous crises such as:
- The 1990 Iraq invasion of Kuwait (8%)
- The 1973 oil embargo (8%)
- The 2011 Libya war (2%)
- The 2022 Ukraine war (2%)
Lessons from past global shocks
Historically, major energy and geopolitical shocks have led to lasting structural changes in the global economy:
- The COVID-19 pandemic accelerated the reshoring of manufacturing
- The Ukraine war pushed European countries to reduce their reliance on Russian gas
- The 1970s oil crisis led to shifts in energy consumption, including smaller vehicles in the US
Energy disruptions have also reshaped global power balances. The Suez Crisis is widely seen as a turning point marking the decline of the UK as a global superpower.
Some analysts are now questioning whether the US could face a similar inflection point, as energy disruptions intersect with broader geopolitical tensions. However, the war remains ongoing, and its long-term consequences are not yet fully clear.
From cooperation to fragmentation
The last major instance of oil being used as a geopolitical weapon dates back to 1973, when Arab members of OPEC imposed an oil embargo on the US, causing prices to surge dramatically over the following decade.
That crisis reinforced the need for global cooperation in energy markets. "Multinational, international cooperation is preferable to individual action," Yergin noted.
A shifting global energy doctrine
Recent analysis suggests the world may now be drawing different conclusions.
Jason Bordoff and Meghan O'Sullivan argue that in today’s fragmented and war-driven environment, countries may increasingly view energy as a strategic tool rather than a shared resource.
At the center of this shift is Iran’s ability to leverage the Strait of Hormuz as a pressure point, creating a major disruption in global oil flows. This development could mark a turning point for the global energy system.
The ongoing crisis signals a potential long-term transformation of the oil market, one defined less by cooperation and stability, and more by competition, fragmentation, and geopolitical leverage.
US likely to extend Russian oil waiver amid price surge, Reuters says
The United States will likely extend a waiver on purchases of Russian oil on Friday in a bid to stabilize global energy prices amid the ongoing war in West Asia, Reuters reported, citing sources.
In an effort to curb rising oil prices, which surged following the US-Israeli aggression on Iran, US authorities had previously eased the sanctions regime on Russian oil.
The Trump administration issued a new license on March 13, allowing countries to temporarily purchase certain Russian oil products. The same day, global crude prices surged above $100 per barrel for the first time since August 2022 as the US-Israeli war on Iran continues to drive market volatility.
Temporarily easing restrictions on oil from Russia, one of the world’s major energy exporters, comes despite earlier pressure from United States authorities on Russian oil companies, as part of broader efforts to curb revenues funding Russia amid the war in Ukraine.
Source:Websites
