The ongoing war in Iran and the delayed reopening of the Strait of Hormuz are shifting the focus of global energy security discussions. Previously, the instability of wind and solar power was often seen as a major weakness, while coal, oil, and natural gas were considered more reliable supply sources. Now, the vulnerability of the fossil fuel transportation chain itself is becoming a new focal point.
Strait blockade amplifies oil and gas risks
The Strait of Hormuz typically handles about 20% of the world's oil and liquefied natural gas transport. With the escalation of conflict in the Middle East, this crucial shipping route has been chronically disrupted, putting pressure on global energy markets and significantly increasing inflation concerns.
Energy experts interviewed by CNBC said the shock exposed the high sensitivity of traditional energy sources to cross-border shipping, geopolitical situations, and import dependence. Kingsmill Bond, an energy strategist at the British think tank Ember, said that criticisms of the “intermittent” nature of renewable energy in the past are now increasingly directed at fossil fuels, as their supply has become more uncertain.
He believes that compared to the oil crisis of the 1970s, countries now have more mature alternatives at their disposal, including solar, wind, battery storage, and electrification technologies. These technologies can be deployed faster and at a lower cost.
European companies emphasize domestic power.
Markus Rauramo, CEO of Finnish energy company Fortum, stated that the key to reducing reliance on imported high-carbon fuels is developing domestic clean electricity. He said this is precisely the direction Europe needs to move in.
However, he also noted that adjusting the energy structure does not mean the intermittent problems have disappeared. For households and businesses still reliant on natural gas, the transition will still present real challenges, therefore policy and system development need to proceed simultaneously.
Birgitte Ringstad Vartdal, CEO of Statkraft, Europe’s largest renewable energy producer, also said that clean energy has clearly risen in importance in energy security following the conflicts in Ukraine and Iran.
The interaction between batteries and hydroelectricity increases
Vartdal stated that the decline in battery costs and the increase in energy storage duration in recent years have made their role more prominent during the morning and evening load transition periods. In the past, these periods often required more traditional power sources to fill the gaps, but now the combination of batteries with photovoltaic and wind power can handle more power supply tasks.
She also pointed out that Norway, with its abundant hydropower resources, is better positioned than most European countries to handle fluctuations in renewable energy. However, from a systemic perspective, the power supply still needs to retain a certain amount of natural gas capacity to cope with prolonged periods of low power generation.
Europe shifts to US LNG
The article also mentions that since the Russia-Ukraine conflict, Europe has clearly shifted towards US liquefied natural gas (LNG). Jan Rosenow, Professor of Energy and Climate Policy at Oxford University, stated that with the ongoing tensions in the Hormuz region, Europe may import more LNG in the future, a significant portion of which will come from the United States.
He believes this means Europe may shift from relying on one type of external supply risk to relying on another. If import sources become further concentrated in a single country, geopolitical and diplomatic shifts could still affect supply stability. In contrast, domestically produced renewable electricity does not face the same cross-border transportation challenges.
Overall, this Middle East conflict has not only disrupted oil and gas transportation but also redefined energy security. The traditional notion that "fossil fuels are more stable and renewable energy is more volatile" is facing more direct and practical challenges.
