Will Hormuz crisis speed up the energy transition?

• The Hormuz crisis in the Middle East has driven up oil and gas prices
• International Energy Agency said this should accelerate renewables
• Investment in the energy transition has grown annually this decade
• But Covid-19 and the Ukraine war have not driven long-term change

The Hormuz crisis has again highlighted the difficulties of relying too heavily on oil and natural gas, but will this lead to an acceleration of the energy transition?

That is the question many in the renewables and storage industries will be asking as the crisis in the Strait of Hormuz in the Middle East deepens. In March, Iran’s military blocked the strait that connects the Arabian Gulf and the Gulf of Oman following attacks by the US and Israel that were launched on 28th February. The strait is a vital route for transporting fuels from countries including Saudi Arabia and the United Arab Emirates.

Around 25% of oil and 20% of liquefied natural gas used globally between 2023 and 2025 passed through the strait. Before the war, around 140 oil tankers passed through the strait daily, but now the figure is around one tenth of that.

It appeared there might be a resolution of the crisis last week when, on 8th April, Iran said it would open the Strait of Hormuz after agreeing a provisional two-week ceasefire with the US.

But this hope proved misplaced. Iran has since blocked the strait again after Israel kept attacking targets in Lebanon, and the subsequent breakdown of peace talks. On Sunday (12th April), US President Donald Trump responded by announcing the US military would enforce its own blockade on Iranian ports in the strait, officially resuming hostilities with Iran.

The impact of the closure has been compared to the 1970s energy crises, where oil shortages drove up prices in regions including Europe and North America.

In 2026, lower supplies of oil and natural gas after the Hormuz blockade have pushed up the price of Brent crude oil from around $67 a barrel to nearly $100, with some analysts predicting oil could hit $150 a barrel. Higher fossil fuel prices affect diverse industries from food production to industrial manufacturing, and a prolonged crisis would drive up energy costs for consumers, accelerate inflation and slow GDP growth.

Some analysts have said this should also drive increased interest in renewables and energy storage systems.

Fatih Birol, head of the International Energy Agency, has argued that the Hormuz crisis would speed up investment in wind and solar power, which could be deployed quickly, but he added that these would not solve the current crisis because the energy system takes years to change. This is often the challenge for renewables: these technologies are hailed as the solution to an immediate crisis, but sidelined when that crisis passes.

We have seen two examples of that trend in this decade alone.

Putin and the pandemic

During the Covid-19 pandemic that started in early 2020, global lockdowns caused swift declines in fossil fuel demand due to restrictions on travel and in other industries. Prices of oil and gas collapsed, and initially it looked as though the pandemic may reshape the world and lead to a faster transition to renewable energy sources.

For a while the pandemic did lay the foundation for pro-renewables policies. In the US, the Biden administration’s Inflation Reduction Act was signed into US law in 2022, with strong support for renewable energy infrastructure investments. Even so, the drop in oil and gas prices in 2020 was temporary and both had recovered strongly by late 2021.

The strategy of energy giant BP is a case in point. In the depths of the pandemic in mid-2020, then-CEO Bernard Looney announced deep cuts in BP’s oil and gas production, and a major increase in renewable energy investments. But last year BP shunned this Looney-era plan with dramatic cuts to renewables spending and rises in oil and gas investment again. BP is only one company, but it is a bellwether for changing oil and gas industry sentiment.

From pandemic-era over-supply, the energy market was faced with the opposite issue in February 2022 when Russia invaded Ukraine. Most European countries stopped using Russian gas in response, which led to spikes in fossil fuel prices that remain elevated.

The war also led more politicians and business leaders to argue that countries needed to rapidly increase investments in renewables, but the reality has been slower. Demand to grow renewables has been undermined by supply chain disruption, slow permitting, growing populist opposition to renewables, and inflation that showed up the weakness of over-ambitious pricing of auction bids. Offshore wind was hit particularly hard.

Annual investment in the energy transition globally has increased year-on-year for the last six years, from $973bn in 2020 to $2.3trn in 2025 according to BloombergNEF’s ‘Energy Transition Investment Trends’ report for 2026. But funding gaps remain if the world is to hit energy transition investment targets, and spending on renewables fell 9.5% to $690bn between 2024 and 2025 due to a slowdown in activity in China.

This demonstrates that the energy transition is moving and investment is growing, but it also shows that even challenges such as Covid-19 and the Ukraine war have not led to the type of transformative change that those in the renewables industry would like to see. The Hormuz crisis could follow this pattern.

Accelerating the transition

Another major challenge for renewable energy amid the energy transition is that rising energy demand makes a ‘transition’ hard to achieve.

For instance, new solar and wind farms consistently account for 85% of power capacity added annually, but most of this goes towards serving increased demand. The rapid expansion of data centres to keep up with the growth of artificial intelligence is accounting for much of the newly installed capacity, along with global population growth and Asia’s emerging middle class.

As a result, we typically do not see renewables replace fossil fuels in most cases, though there are examples where sustainable fuels are replacing dirtier alternatives.

DNV discussed this in its ‘Energy Transition Outlook 2025’ report last October, when it said “the energy transition is rolling on” but that a “lagging grid buildout” is holding back the growth of solar and wind, even when they are paired with batteries. It said that the global transition to a decarbonised energy mix is “unstoppable but too slow, setting up grave risks for future generations”, and net zero was only achievable by 2100.

That was written before the Hormuz crisis, but its argument may give the renewable and storage industries some hope. It claimed that “heightened focus on energy security by policymakers worldwide slightly favours non-fossil over fossil fuel sources in the long run”, though this would include nuclear. It said that “the transition is inevitable” and “no policy reversals, budgetary deficits, or geopolitical crisis will stop it”.

The question should not be whether crises like Hormuz will stop the energy transition, but whether they will accelerate it. Even backers of renewables have their doubts.