The World Is Entering a New Era of Energy Security

The U.S.–Iran and Russia–Ukraine wars are more than regional or military conflicts. They are exposing weaknesses in the global energy and economic system and demonstrating that energy security can no longer be seen as independent of financial security, transportation, military security, strategic autonomy, and even ties with world power hegemonies.The Russia–Ukraine war disrupted Europe's long-standing dependence on Russian pipeline gas. The U.S.–Iran conflict has exposed another vulnerability: the concentration of global oil and LNG flows around strategic maritime routes, particularly the Strait of Hormuz, and more recently, the Bab-el-Mandeb Strait. The International Energy Agency (IEA) described the disruption by the US-Iran war through the Strait of Hormuz as the largest oil-supply disruption in its history, with roughly 20 million barrels per day of crude oil and refined products affected when the Strait was effectively closed.Taken together, these crises may mark the beginning of a new phase of globalization—one in which countries become less willing to rely too heavily on any single source, route, technology, or global power. Complete economic or energy independence is neither realistic nor necessarily desirable. Instead, countries are likely to pursue greater strategic autonomy by diversifying their energy supplies, building alternative transport and supply routes, strengthening domestic capabilities, creating greater economic and technological resilience, and reassessing their strategic relationships with major global powers.From Financial Dependence to Energy DependenceThe evolution of today's vulnerabilities can be viewed through several stages.The 1990s were marked by financial integration. East Asian economies became deeply integrated into international capital markets and accumulated substantial foreign-currency and dollar-linked liabilities. The 1997 Asian financial crisis demonstrated how rapidly capital-market disruptions could spread across otherwise strong economies. IMF-supported programs in Indonesia, South Korea, and Thailand illustrated the extent to which financial dependence could become a matter of national economic security. The 2000s and early 2010s exposed Europe's energy dependence. The 2007–10 financial crisis itself did not create Europe's dependence on Russian gas. Instead, it temporarily reduced European gas demand while underlying structural conditions remained: declining domestic production and continued reliance on imported pipeline gas. From 2010 onward, Russian gas became increasingly important again, supported by infrastructure such as Nord Stream and the economic attractiveness of geographically close pipeline supplies.By 2018–21, Russian gas accounted for more than 40% of EU gas demand. After Russia's 2022 invasion of Ukraine, the loss of large volumes of Russian pipeline gas contributed to Europe's energy crisis and demonstrated the risks of concentrated external supply.The 2010s brought a new dimension: U.S. energy power. The shale revolution transformed the United States from a major energy importer into the world's leading oil and gas producer and a major LNG exporter. Energy production therefore became increasingly connected to geopolitical and financial influence.The 2020s have revealed a broader vulnerability: highly interconnected global supply chains. Even when countries diversify their energy suppliers, they remain exposed to shipping routes, insurance, financial markets, technology, and geopolitical shocks.Europe: From Russian Gas to Global LNG DependenceEurope has substantially reduced its dependence on Russian pipeline gas, but this has not created complete energy independence.U.S. LNG has become increasingly important. The U.S. share of EU LNG imports rose from approximately 29% in 2021 to 53% in 2025. In 2025, the United States and Norway each accounted for roughly one-third of EU gas imports. Qatar, North Africa, and other suppliers also remain important.This represents diversification, but LNG is part of a global market. Europe's physical dependence on Russian pipelines has therefore been replaced by a more diversified system that is increasingly connected to global LNG suppliers, shipping capacity, and international prices. The United States is particularly important: it supplied about 26% of global LNG exports in 2025, with the IEA expecting its share potentially to approach one-third by the end of the decade.The lesson is not that Europe simply exchanged one dependency for another. Rather, Europe moved from a concentrated pipeline dependency toward a broader and more flexible—but still externally dependent—energy system.The 2026 Middle East conflict adds another layer. Energy-price pressures can affect European inflation, industrial production, transport, and household purchasing power. IMF analysis has also warned that prolonged interruptions to Russian gas supplies could cause severe shortages and significant economic losses in vulnerable Central and Eastern European economies.Europe's challenge is therefore to build strategic energy autonomy without abandoning international markets. That requires multiple suppliers, adequate storage, alternative infrastructure, domestic renewable and nuclear capacity where appropriate, and resilience against maritime and geopolitical disruptions.China: Less U.S. Energy Dependence, but Greater Exposure to Global ChokepointsChina's situation is different from Europe's. Its vulnerability is not primarily direct dependence on U.S. oil and gas. U.S. LNG exports to China fell to zero in 2025 from approximately 0.6 Bcf/d in 2024, while China's LNG imports also declined as domestic production and Russian pipeline gas increased. China has simultaneously expanded alternative energy relationships with Russia and Central Asia, increased domestic production, developed strategic reserves, expanded renewables, and accelerated transport electrification.However, China remains highly exposed to Middle Eastern energy flows and maritime chokepoints that are mostly affected by US policies and current US-Iran conflicts.According to the U.S. Energy Information Administration, about 89% of crude oil and condensate passing through the Strait of Hormuz in the first half of 2025 was destined for Asian markets, with China, India, Japan, and South Korea accounting for about 74%. A large share of global LNG trade also passes through the Strait, with almost 90% of LNG exports through Hormuz in 2025 destined for Asia.China therefore faces a paradox: reducing direct dependence on U.S. energy does not eliminate vulnerability to the global energy system. Oil and LNG prices, maritime security, financial markets, insurance, and geopolitical tensions remain interconnected.The U.S.–Iran conflict strengthens the economic rationale for China's diversification efforts. The strategic objective is not necessarily isolation from global markets, but reducing exposure to any single supplier, route, financial system, or geopolitical pressure point.The Middle East: Energy Wealth Without Complete Strategic AutonomyThe Middle East presents another contradiction. Persian Gulf states possess some of the world's largest oil and gas resources, yet energy wealth does not automatically create strategic independence.Military and security relationships remain significant. SIPRI reported that 54% of major arms imported by Middle Eastern states during 2021–25 came from the United States. U.S. systems represented approximately 77% of Saudi Arabia's, 48% of Qatar's, 62% of Kuwait's, and 42% of the UAE's major arms imports.This creates a structural paradox: Gulf countries supply critical energy to the global economy while depending heavily on external security and military technologies.The US-Iran conflict demonstrates why reserves alone cannot guarantee energy security. Oil and gas must still move through pipelines, terminals, ports, refineries, LNG facilities, and maritime routes. Each is vulnerable to disruption.For Middle Eastern exporters, strategic resilience therefore requires more than producing hydrocarbons; they should choose between continuing with the US, developing with China, relying on Russia, or selecting other options. It includes alternative export routes, strategic storage, domestic refining and petrochemicals, local engineering and technology capabilities, diversified security relationships, sovereign financial reserves, and broader economic diversification.When Energy Shocks Become Corporate ShocksEnergy crises do not remain within the energy sector. Higher oil and gas prices raise costs for aviation, shipping, manufacturing, chemicals, fertilizers, agriculture, tourism, and household consumption.The experience of Spirit Airlines illustrates this transmission mechanism. The company was already under bankruptcy protection and facing serious financial difficulties, but Reuters reported that the doubling of jet-fuel prices during the war contributed to its eventual cessation of operations in May 2026. The broader lesson is important: geopolitical shocks can become the additional pressure that pushes already vulnerable companies beyond the point of survival.The same mechanism can affect governments and households. Higher energy, fertilizer, transportation, insurance, and food costs can increase inflation while simultaneously reducing economic growth.What Does Economic Independence Really Mean?Economic independence cannot be measured simply by GDP, oil reserves, electricity generation, or foreign-exchange holdings. A country may produce its own electricity but depend on imported gas. It may possess large oil reserves but rely on foreign technology and equipment. It may hold substantial financial reserves but remain dependent on dollar-based financial infrastructure. It may have a strong domestic industry while depending on foreign shipping and global supply chains.The dollar remains deeply embedded in international trade and finance, giving the global financial system an important degree of U.S. influence. The current crises may therefore encourage China, Europe, and Middle Eastern states to diversify their monetary, technological, supply-chain, financial, and security relationships.This does not necessarily mean the end of dollar dominance or the emergence of completely separate economic blocs. More likely, it means a gradual movement toward greater redundancy and strategic options.A New Global Energy Order: From Efficiency to ResilienceThe lessons of the past three decades can be summarized as follows:1990s: vulnerability created by financial dependence.2000s: vulnerability created by concentrated energy dependence.2010s: growing geopolitical importance of U.S. energy and financial power.2020s: vulnerability created by highly interconnected global supply chains and strategic chokepoints.The Russia–Ukraine war demonstrated that concentrated pipeline dependence can become a strategic vulnerability. The U.S.–Iran conflict demonstrates that even diversified energy systems remain vulnerable when critical maritime chokepoints are disrupted. Then, neither pipelines, nor shipping lines are concrete solutions. China’s experience shows that reducing direct dependence on a major source, such as U.S. energy, does not eliminate exposure to global markets. The Gulf states demonstrate that energy wealth does not automatically provide complete strategic autonomy.The likely response is therefore not complete economic separation. It is redundancy: multiple energy suppliers, alternative transport routes, strategic reserves, diversified financial mechanisms, domestic technology, stronger local industries, and broader diplomatic partnerships.For Europe, strategic autonomy means avoiding excessive dependence on any single external energy supplier. For China, it means reducing exposure to maritime chokepoints and external financial pressure while maintaining access to global markets. For Middle Eastern exporters, it means transforming energy wealth into technological, industrial, financial, and institutional capabilities that can withstand external shocks.But even these solutions could face some paradoxical bottlenecks, given that a global superpower, such as the United States, exercises practical control or operational influence over these solutions and can render them ineffective or reverse them when necessary.The future of energy security will therefore be determined not only by who possesses oil and gas, but by who possesses different options to bring the product to the final consumer.Globalization is not necessarily ending. It is becoming more security-conscious. The energy system of the future may place greater value on resilience and strategic flexibility rather than simply pursuing the lowest-cost supply.The central question for governments and businesses may therefore be changing: not just what energy costs, but what dependence costs when the political relationship underpinning it suddenly breaks down.By Shahriar Sheikhlar for Oilprice.comMore Top Reads From Oilprice.comSpaceX Sends Starship to Orbit and Deploys 26 Starlink V3 SatellitesTotalEnergies Targets 3% Annual Oil and Gas Growth Through 2030European Gas Prices Rally on U.S.-Iran Stalemate