The shift from oil isn’t just about being ‘green’ anymore. It’s a massive power move for national security.

The global push to move away from oil and gas has long been framed as a response to the effects of climate change and the need to care for the planet. But a growing group of strategists, analysts and industry participants argue that the transition is being reshaped by a different, more urgent factor: energy security.

Disruptions in global energy markets due to the war in Iran and increasing attacks on infrastructure in the Middle East have sharpened concerns about the fragility of fossil fuel supply chains and led to new debates about how countries can reduce dependence on imported hydrocarbons.

“One of the predictions you can make about what’s happening is that it’s going to accelerate the energy transition,” Jeff Currie, Carlyle’s chief strategy officer for energy pathways, said last week at CERAWeek, S&P Global’s major energy industry conference.

“The energy transition has never had anything to do with climate change… Security has always been the most important issue.”

Over the past four weeks, since the United States and Israel launched a massive airstrike against the Iranian regime, the resulting conflict has engulfed the Middle East and shaken global supply chains in what has become the largest energy disruption in history.

The Strait of Hormuz, the most critical transit point for the world’s oil shipment, was effectively closed due to the Iranian regime’s threats of violence, cutting off approximately 16 million barrels of oil per day from the global market. Futures prices for Brent crude (BZ=F), the international oil pricing benchmark, and West Texas Intermediate (WTI) crude (CL=F), ​​the U.S. benchmark, have risen more than 40% since the conflict began.

Read more: How do oil price shocks affect your wallet, from gasoline to groceries?

Currie and others argue that the geopolitical shock underscores a long-standing truth: Oil and gas are uniquely portable and tradable energy sources, but the same characteristics that make the products global commodities also make them vulnerable to intervention by other nations. Supply disruptions, transportation risks and price increases can ripple through economies within weeks.

“You only import a solar panel or an electric car once,” Roger Diwan, vice president of financial services at S&P Global Commodity Insights, said at CERAWeek. “You import oil every day.”

This distinction becomes even more pronounced as governments confront a world in which globalization and the security guarantees that undergird the globalized system are less certain. Energy supply chains built around open sea lanes and stable trade relationships are increasingly being tested by wars, sanctions and political fragmentation.

Read more: What could an extended war with Iran mean for gas prices?

Russia’s invasion of Ukraine in 2022 has exposed the fragility of Europe’s energy system after years of deepening dependence on Russian pipeline gas. Before the war, Russia supplied about 40% of the European Union’s natural gas, much of which flowed to Germany via the Nord Stream pipeline system.

The shock spread across the continent as flows began to fall, first due to political pressure, then outright cuts. Energy prices reached record levels, industrial users cut production and governments were forced to take urgent measures to secure supply ahead of winter.

The situation worsened dramatically after the sabotage of the Nord Stream pipelines in September 2022. The loss of this infrastructure forced a rapid and costly pivot to global liquefied natural gas (LNG) markets, leading to intense competition with Asia for cargoes and pushing benchmark European gas prices (TTF=F) to multiples of historical norms.

The crisis has accelerated inflation, strained public finances through subsidy programs and highlighted a key vulnerability: Europe’s dependence on imported energy.

The United States, by contrast, enters the current shock from a more isolated position. Thanks to the shale gas boom, the United States has become the world’s largest producer of oil and natural gas, reducing direct exposure to physical supply disruptions; But the country is not completely isolated. Oil is priced globally, and disruptions in the Middle East are still impacting gasoline and diesel costs; Increasing LNG exports are increasingly linking US natural gas prices to global markets.

But the risk remains more serious for major energy importers in Europe and Asia. Countries dependent on seaborne crude oil and LNG are forced to compete for cargoes in stressed markets; This increases both price volatility and supply risk during geopolitical disruptions.

Read more: How can you protect your money as turmoil in the Middle East fuels market volatility?

Currie pointed to historical precedents such as the 1973 oil embargo, when global demand fell sharply as supply was cut off. “It didn’t happen because people wanted it to,” he said. “This was imposed on them.”

Analysts say today’s shock could lead to similar results; not only through short-term demand destruction caused by high prices, but also through long-term changes in investment and consumption patterns.

Frederic Lasserre, head of market intelligence at trading firm Gunvor, said sustained price increases could change consumer behavior in ways that are difficult to reverse.

“If the price stays high long enough, you change habits,” Lasserre said at CERAWeek. “You decide to go electric. That kind of demand destruction has less of a return.”

Karim Fawaz, director of S&P Global Energy’s energy and natural resources group, estimates that electric vehicles alone have already reduced global oil demand by about 1.3 million barrels per day; This figure could rise if governments respond to geopolitical shocks with stronger incentives for electrification.

The shift towards energy security also affects investment decisions. Pablo Hernandez Schmidt-Tophoff, head of global infrastructure at Lazard, said asset valuations are starting to reflect a renewed emphasis on resilience rather than just financial returns.

“The name of the game is energy security and energy flexibility, even if it comes at the expense of capital efficiency,” he said.

The change is unlikely to be immediate or uniform. Analysts and industry executives have warned that much of the developing world remains structurally dependent on oil, especially regions with limited electricity infrastructure.

While the adoption of electric vehicles, even in developed economies, is mostly dependent on government incentives, demand for refined products has proven to be more resilient than expected. Oil demand has remained relatively stable in Norway, where electric vehicles account for more than half of new car sales; This highlights the difficulty of rapidly displacing hydrocarbons on a large scale.

In the US, the Trump administration has rolled back many major “green” initiatives, including the cancellation of many major wind and solar projects. At the press conference held at CERAWeek, Interior Minister Doug Burgum said: USA to pay French energy giant TotalEnergies (TTE) $1 billion It will cancel plans for a major offshore wind development along the US East Coast and instead invest the money in hydrocarbon infrastructure.

The International Energy Agency also predicted that hydrocarbon demand will increase May continue to grow until 2050Especially as the developing world continues to depend on oil imports for economic growth.

But even if demand turns out to be more resilient than expected, the current shock is accelerating a realignment of how to meet that demand and how countries think about securing it. Carlyle’s Currie said such shifts could ultimately accelerate a shift away from hydrocarbons in a way driven by necessity rather than environmental ambition.

“We will have the energy transition thrust upon us in a very painful way,” Currie said at CERAWeek. “No matter what happens, security will be paramount.”

Jake Conley is a breaking news reporter covering U.S. stocks for Yahoo Finance. Follow him on X at @byjakeconley or email: jake.conley@yahooinc.com.

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