Oil surge to $120 revives global push for renewable energy

Tuesday 10 - 07:00

By: Dakir Madiha

Oil surge to $120 revives global push for renewable energy

The ongoing war involving the United States and Israel against Iran has disrupted a significant share of global energy supplies, pushing oil prices sharply higher and renewing calls worldwide to accelerate the transition toward locally produced renewable energy.

Now entering its second week, the conflict has halted roughly one fifth of the world’s oil and natural gas supply. Since the first strikes on February 28, Iran has retaliated by effectively shutting down the Strait of Hormuz, launching attacks on energy infrastructure across the Persian Gulf, and forcing production stoppages from Qatar to Iraq.

The disruption has sent benchmark Brent crude soaring from around $73 before the conflict to about $120 per barrel, according to Reuters, sending shockwaves through global energy markets.

QatarEnergy declared force majeure on its liquefied natural gas exports after Iranian drone strikes hit energy facilities. The company accounts for roughly 20 percent of global LNG supply and said it could require at least a month to restore production.

The crisis has intensified a long standing warning from energy analysts about the vulnerability created by reliance on fossil fuels transported through strategic geopolitical chokepoints.

Lucas White, senior portfolio manager at GMO, said the situation reinforces the argument for expanding renewable energy sources such as solar and wind. In comments reported by Morningstar, he said greater reliance on domestically produced renewable power could reduce exposure to disruptions in oil and gas markets.

Analysts also say sustained high oil prices could accelerate demand for electric vehicles and other alternatives to fossil fuels. Pavel Molchanov, an analyst at Raymond James, said the current turmoil highlights the link between energy security and the transition to renewable power.

In the United Kingdom, economists from the London School of Economics have urged the government to speed up the development of domestic clean energy systems to reduce dependence on volatile international fuel markets.

Some analysts argue the conflict could also reinforce the strategic advantage of Asian countries that have invested heavily in renewable manufacturing. Asia Times reported that China and India may benefit if global demand for solar panels, batteries, and other clean technologies accelerates.

Historical experience offers both encouragement and caution. After Russia invaded Ukraine in 2022, Europe sharply increased renewable energy capacity. Solar installations across the European Union nearly doubled as governments moved to reduce reliance on Russian natural gas.

However, the current surge in energy prices also carries risks. Axios reported that higher fuel costs could drive inflation and push interest rates upward, making large scale renewable projects more expensive to finance.

Fitch Solutions warned that prolonged disruption of LNG supplies could force some countries in Asia and Europe to increase coal use to maintain electricity generation. Meanwhile, ClearView Energy Partners suggested that policymakers in Washington could consider certain clean energy measures if high oil prices persist.

Analysts say the long term impact will depend largely on how long the disruption continues. Asia Times described the conflict as a stress test for the energy model across Asia, where short term exposure to fossil fuel shocks remains high but sustained instability could ultimately accelerate the shift toward renewable power.