Iran-U.S. Conflict Puts Global Energy Markets at Risk

The ongoing conflict between the U.S. and Iran has put pressure on global energy markets, raising questions about whether a new energy security regime will emerge from this crisis.

The 1973 oil embargo transformed global energy markets by demonstrating that crude oil can be used as a geopolitical weapon. In response, strategic petroleum reserves (SPRs) were established to provide emergency supplies during disruptions, the International Energy Agency (IEA) was created to coordinate energy policy among consuming nations, and OPEC's spare production capacity acted as a stabilizing force.

However, the current disruption is driven by constraints on transportation and logistics rather than a shortage of oil production capacity. The Iranian blockade and military tensions surrounding the Strait of Hormuz have exposed the vulnerability of one of the world's most important energy chokepoints.