Gulf Conflict Tests World's Reliance on Fossil Fuels

The ongoing conflict in the Gulf region has raised concerns about the world's reliance on Middle Eastern oil. The fear is not just of higher oil prices, but whether the region can continue to supply a third of global crude.

A prolonged war could test whether the world is ready to move beyond fossil fuels and transition to cleaner energy sources. However, despite the growth of renewables, oil and gas still account for more than half of global energy consumption.

The Gulf countries hold around 33% of proven global oil reserves and 21% of natural gas reserves. A disruption in the Strait of Hormuz or Bab el-Mandeb could cut off nearly a fifth of global oil supplies and one-tenth of natural gas supplies.

While some alternative suppliers like the US, Canada, Brazil, Guyana, and Norway have boosted output and exports, they cannot replace the massive supply deficit from the Persian Gulf immediately. Russia and Venezuela were potential alternatives, but sanctions constrain their production and exports.