The likely effects of the Iran war on the global energy transition in Oil & Companies News 30/03/2026 The Iran war has unleashed the biggest fossil supply shock in decades. The net long-term result appears to be a boost for renewables and nuclear as, in most countries, the incompatibility of oil and gas dependency with energy security is now beyond dispute. This note presents initial thinking from DNV’s Energy Transition Outlook research team on the implications of the war in Iran for the global energy system and the energy transition. We cannot predict when this destructive war, which began on 28 February, will definitively end. What is already clear is that the conflict is inflicting devastating human consequences, causing widespread death, injury, and suffering for people across the region. From an energy system perspective, its immediate impacts are enormous, and its long-term consequences for the oil and gas industry, regional and global economies, and on the pace of the energy transition will be significant. Key takeaways • Without knowing the duration and possible escalation of the conflict, it is clear that restoring production will take time; restoring trust even longer. It is likely that the world will therefore see elevated oil and gas prices for a long time. • The present fossil supply shock disproportionately affects Asia, but all energy importing countries will suffer, and their motivation to make themselves less dependent on oil and gas imports will rise. • The transition has gained strategic urgency, but it is not cost free. Higher interest rates will raise capital costs, and diversification takes time, but energy security concerns will ultimately strengthen the pull toward renewables and nuclear. • Historic disruption with long-term consequences for fossil markets Iran’s forced closure of the Strait of Hormuz on 4 March created the biggest oil and gas supply shock in the history of the industry. As widely reported, about 20% of the world’s shipments of oil and natural gas normally pass through the strait, with over 80% of these shipments bound for Asian markets. This has, as of the date of writing, been reduced to a mere trickle favouring nations friendly to Iran. The short-term consequences are worst in countries with low oil and gas stocks and a weak ability to pay high spot prices, such as Pakistan, Bangladesh, and Sri-Lanka. The oil market was not tight before the war and a global gas glut was expected this year, but with Saudi Arabia and Qatar now hobbled by the war, no alternative large swing producer is able to cover the shortfall in the short or medium term. Russia, now acting under a temporary waiver of sanctions by the US, will look to fill some of the gap, but its own production amounts to only 4% of global crude oil and around 15% of natural gas production, with limited LNG export capacity. The US was already planning to significantly boost LNG export volumes, but not at the amounts and timing now required. Moreover, a high export spot price for LNG places pressure on the domestic price of natural gas, and high domestic oil and gas prices are deeply unpopular among voters and pose a severe test ahead of the upcoming mid-term elections in the US. Despite some pronouncements of an imminent peace, this may well not happen, and the possibility for rapid re-escalation from any of the combatant nations means that there is considerable downside risk of further damage to energy production and export facilities in th