Oil dips as Iran war accelerates global shift to renewables

Wednesday 15 April 2026 - 10:00

By: Dakir Madiha

Oil dips as Iran war accelerates global shift to renewables

The war in Iran, now in its seventh week, has disrupted roughly 20 percent of global oil supply passing through the Strait of Hormuz and pushed energy prices to levels not seen since 2022. Yet the crisis is also accelerating a structural shift toward renewable energy, with analysts saying the transition could reshape global markets for decades. Oil prices fell below 100 dollars per barrel on Tuesday after signals of possible de-escalation, according to The New York Times, though prices remain about 35 dollars higher than a year ago.

The conflict, triggered by US and Israeli strikes beginning on February 28, has led to the effective closure of the strait and damage to at least 23 oil and gas sites across the region. The disruption has intensified concerns about supply security and exposed vulnerabilities in fossil fuel dependence. At the same time, it has reinforced the economic case for alternatives that are less exposed to geopolitical risk.

Unlike past oil shocks, renewable energy now offers a viable and often cheaper substitute. Data from the International Renewable Energy Agency shows renewables accounted for 85.6 percent of new global power capacity in 2025 and now represent 49.4 percent of total installed capacity. A United Nations analysis found that more than 90 percent of new renewable projects are cheaper than fossil fuel alternatives, strengthening the case for rapid deployment.

Industry analysts say the shift was already underway before the crisis. Experts at the energy think tank Ember argue that solar, wind, and electric vehicles are now cost competitive, faster to deploy, and locally sourced, making them more resilient in times of disruption. In the United Kingdom, combined wind and solar generation reached a record 11 terawatt-hours in March, cutting gas import costs by nearly one billion pounds in a single month, according to Carbon Brief.

Long-term projections suggest the impact could be significant. A report by Wood Mackenzie estimates that prolonged instability in the Middle East could reduce global oil demand by 20 percent and gas demand by 10 percent by 2050, as governments accelerate electrification and invest in domestic energy systems. Nuclear power output could also rise by 40 percent above baseline forecasts as countries seek stable supply.

However, short-term challenges remain. Supply chain disruptions in the Strait of Hormuz are affecting access to key materials needed for renewable technologies, while higher interest rates complicate financing for capital-intensive projects. Some countries, including India and Indonesia, have temporarily increased coal use to offset immediate shortages. Analysts warn that despite the momentum toward clean energy, dependence on imported fossil fuels continues to pose economic and strategic risks.