What began as a military operation against Iran’s nuclear and command infrastructure escalated within 48 hours into something the International Energy Agency (IEA) would later call the largest supply disruption in the history of the global oil market, eclipsing even the 1973 Arab oil embargo.

Iran’s closure of the Strait of Hormuz – the 33-kilometre chokepoint through which roughly a fifth of the world’s seaborne oil and LNG normally passes – did what geopolitics rarely manages: it forced nearly every government on earth to rethink, in the space of a few months, how it powers itself.

Six months on, with ceasefires struck, broken and re-struck, the headline numbers have become almost familiar. Brent crude, trading in the low seventies before the war, spiked past USD 120 a barrel within days.

Qatar’s Ras Laffan LNG complex took a direct hit that analysts estimated would need three to five years to repair, sending Asian spot LNG prices up by more than 140% overnight. Petrol pumps from Hanoi to Berlin saw queues not witnessed in a generation.

But the more consequential story is not the spike – spikes fade – it is what governments, companies and households did in response, and how much of that response looks permanent.

A crisis measured in decades, not weeks
Energy analysts have a habit of drawing three-scenario charts for crises like this: quick resolution, prolonged standoff, and full-blown regional war.

What has actually unfolded is messier – a stop-start conflict with ceasefires that hold for weeks before collapsing, as happened again in July when strikes resumed on tankers in the strait.

That unpredictability is itself the lasting economic signal. Markets can price in a war. What they cannot easily price in is a war that keeps almost-ending.

This is precisely why the IEA’s 2026 World Energy Investment report, released in May, reads less like a snapshot of a single bad year and more like a hinge point. Global energy investment is on course to hit USD 3.4 trillion in 2026, and the composition of that spending tells the real story.

Oil investment is set to fall for a third consecutive year, dropping below USD 500 billion, even as crude prices sit well above their pre-war range. That is a striking reversal of how energy shocks used to work. The 1970s oil crises triggered a drilling boom.

This one has done the opposite, because producers no longer believe elevated prices will last long enough to justify decade-long upstream commitments, and because the risk premium attached to Gulf infrastructure has made the region itself a harder place to invest in.

Where the money is going instead is instructive. Natural gas investment is climbing to USD 330 billion, its highest level in a decade, driven overwhelmingly by new liquefied natural gas export terminals in the United States and Qatar – a hedge against exactly the kind of chokepoint vulnerability Hormuz just exposed.

Renewables remain the largest single category of spending, at roughly USD 665 billion, more than half of it in solar. And in a twist that unsettles the clean-energy narrative, coal investment is heading for USD 180 billion, its highest since 2012, as Asian economies squeezed by the oil and gas disruption fall back on the one fuel many of them can produce at home. China alone accounts for close to 70% of that coal spending, even as it simultaneously leads the world in solar deployment.

The lesson governments appear to be drawing from this crisis is not “decarbonise faster” or “drill more,” it is “diversify everything,” reaching for whatever domestic resource is available, renewable or otherwise.

The geography of who pays
Energy shocks have never been distributed evenly, and this one is unusually blunt about who absorbs the pain.

The Gulf states that built their economic models on frictionless Hormuz transit – Saudi Arabia, the UAE, Iraq, Kuwait, Qatar – have seen exports collapse even with alternative pipelines like the East-West Petroline and the Abu Dhabi Crude Oil Pipeline running near capacity, together offering barely a tenth of what used to move through the strait.

Meanwhile, exporters outside the conflict zone have quietly profited. Analysis comparing shipping data before and after the war found the United States gained roughly USD 50 billion in additional export revenue and Russia more than USD 15 billion, simply by being able to ship oil that Gulf producers could not.

The knock-on effects reach further than fuel bills. Roughly ten million Indians work in the Gulf and send home upwards of USD 40 billion a year – around a third of India’s total remittance inflows – so any prolonged slowdown in Gulf economies lands directly on household incomes thousands of kilometres away.

Fertiliser markets, dependent on natural gas as a feedstock, tightened alongside LNG, prompting warnings from food-policy researchers about a slower-burning threat to crop yields in fertiliser-import-dependent regions well into 2027 and beyond.

And in a detail that says something about how thinly some economies are stretched, small trading states from Djibouti to Vietnam reported the kind of acute fuel shortages and panic buying that oil-rich nations barely noticed.

The unlikely beneficiaries
Every energy shock creates its opportunists, and this one has already reshaped investment maps well beyond the Middle East. Rystad Energy and other consultancies now point to Brazil, Guyana and Suriname as likely beneficiaries of a slower but broader fossil-fuel diversification through the 2030s, as buyers who once defaulted to Gulf crude look for suppliers with less geopolitical baggage.

Brazilian meat and poultry exporters, cut off from their usual direct routes to Gulf buyers, have rerouted through the Red Sea and Suez Canal at higher cost – a small but telling example of how conflict in one region reshapes trade logistics in entirely unrelated industries.

Electric vehicles have had an unexpectedly good war. April 2026 was the strongest month for EV sales in Europe on record, as fuel price volatility pushed consumers toward vehicles insulated from the pump. The United Kingdom saw its highest rate of solar panel installations since 2012 over the same period.

None of this is coincidence: crises that make fossil fuel prices unpredictable tend to make the fixed, known cost of a solar panel or a battery look considerably more attractive, regardless of what a country’s climate policy says on paper.

What actually sticks
The hardest question for anyone trying to write about this conflict’s “long-term effects” while it is still not entirely over is which changes are structural and which are simply crisis reflexes that will unwind the moment the strait reopens for good. Strategic petroleum releases, excise duty cuts, emergency tax credits for fuel-poor households – these belong to the second category. They will fade.

What looks more durable is the shift in how governments think about energy security itself. The IEA’s language is telling: officials now speak of “resilience rather than optimisation” as the organising principle of energy policy. That is a genuine change in worldview, not just a spending line.

Countries that spent the 2010s optimising for the cheapest barrel are now willing to pay a premium for supply they control, whether that means Chinese coal plants staying open longer than planned, new US and Qatari LNG terminals, or European grid investment running 20% higher than a year ago.

The IEA itself notes that nearly three-quarters of 2026’s investment decisions were locked in before the war began, meaning the fuller reckoning – in financing costs, in project pipelines, in where the next generation of energy infrastructure gets built – is still working its way through the system.

If the 1973 oil shock taught the world that energy security and foreign policy were inseparable, and the 2022 Ukraine invasion taught Europe that pipeline dependency was a strategic liability, the 2026 Iran war may end up teaching a subtler lesson: that in an interconnected energy system, the search for security itself becomes destabilising when every country chases it at once.

Six months in, the world is not so much replacing oil as hedging against needing quite so much of it from quite so few places – a shift that will likely outlast the war that triggered it by many year

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Asia is on track to becoming the world’s largest energy-consuming region by 2025. This means that the region will increasingly be exposed to energy security and climate change risks unless measures are taken to contain energy consumption.

Making end-users realize that energy is a scarce, valuable resource might not be as simple as it sounds. Yet, if realized, demand-side efficiency gains have the potential to be a main driver for enhancing energy security.

“Investing in energy efficiency programs will have long-term rewards despite the initial higher costs and challenges of setting it up. This is one hurdle that governments need to realize at the outset.”

Demand-side energy efficiency means increasing efficiencies at the point of final energy consumption, mainly for industry, buildings, vehicles, and machinery. ADB Senior Energy Specialist Aiming Zhou explains that it is also gaining importance as a means to maintain electric system reliability.

“In developing Asia, where energy demand is growing rapidly, energy efficiency can be a tool to cut energy use where the electricity system is under significant pressure. This approach can prevent blackouts and brownouts, and extend the operational lifetime of existing transmission and distribution infrastructure.”

According to an ADB evaluation report, Review on Energy Efficiency Interventions, “improving energy efficiency is a highly cost-effective alternative to increasing energy availability. A megawatt of power capacity saved—for example, by retrofitting energy-efficient industrial equipment—costs about half that of adding the equivalent coal-fired power-generating capacity.”

So far, countries in Asia and the Pacific have responded to energy efficiency programs with policies and programs to guide specific changes in energy use across sectors.

“A key focus is industry, because manufacturing, processing, and related activities are often energy intensive,” says Zhou. “But with ongoing development and urbanization throughout Asia, commercial buildings, households, and public sector operations are also being targeted.”

Energy for all

In 2012, ADB invested $2.3 billion in clean energy projects, of which $1.3 billion went to renewable energy. Around $974 million went to investments in energy efficiency with the remainder invested in clean energy funds that support further development.

The goal of ADB’s Energy for All Partnership is to provide 100 million people with access to modern energy by 2015. This will be achieved by encouraging cooperation between the private sector, financial institutions, governments, and non-government organizations to scale up investments in energy access.

The Philippine Energy Efficiency Project shows the benefits of demand-side energy efficiency. The project improved energy use in the Philippines, through actions ranging from lighting retrofits of government buildings to the installation of 9 million compact fluorescent lamps (CFL) in the residential sector. So far, 35 buildings have been retrofitted for savings of 1,372.79 megawatt-hours (MWh) per year. In Metro Manila alone, a switch to light emitting diode (LED) traffic lights is saving 764.72 MWh per year.

“These interventions reduce the cost of energy production and oil imports in the Philippines, and help mitigate emissions of sulfur dioxide, nitrogen oxide, particular matter, and carbon dioxide,” says Zhou.

ADB also “walks the talk” in its own operations. Since 2007, ADB has lowered electricity consumption at its Manila headquarters by at least 4% per year per staff member, through new controls for air conditioning, improved lighting, and other technologies.

Responding to challenges

Investing in energy efficiency programs will have long-term rewards despite the initial higher costs and challenges of setting it up. This is one hurdle that governments need to realize at the outset.

“Energy efficiency is an investment, and should be evaluated accordingly,” says Zhou. “Interventions that deliver real savings over the long term will entail upfront costs for households or businesses. These types of hurdles or inconveniences can be termed as ‘transaction costs’ that can limit energy efficiency interventions, even when cost-benefit analysis justifies their use.”

However, Zhou explains that in order to scale up funding in this sector, there must be a concerted approach at several levels.

“What we need now is greater effort to help banks and lenders understand that providing energy efficiency technologies and services is a profitable business line,” he added.

Changing mindsets

Clearly, energy efficiency programs depend heavily on end-users and efforts should be channeled to educating, informing and encouraging them to do their part.

Energy prices that reflect the true cost of energy can nudge households and businesses to make more energy efficient choices. Government can promote programs that incentivize conservation and promote awareness of its benefits.

“The key is to promote a fundamental shift in the general public’s attitudes, toward instilling recognition that energy is a scarce, valuable resource for us all,” says Zhou.

Source : Asian Development Bank

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