Russia’s war against Ukraine and escalating conflict in the Middle East have significantly changed how governments and investors think about energy. What was previously treated mainly as a question of cost and efficiency has become a matter of economic security, resilience, and strategic risk management. The latest disruption around the Strait of Hormuz has made this especially clear. A route that carries a major share of global oil and LNG trade has become a direct source of supply disruption, shipping delays, and price volatility.
In this context, the key question is no longer whether to invest in fossil fuels or renewables. The more relevant issue is how to allocate capital across technologies and time horizons when countries must manage immediate supply security, price shocks, infrastructure constraints, and long-term transition goals at the same time. Rather than pushing the energy system clearly in one direction, global instability is reinforcing investment in both fossil fuels and clean energy, because each serves a different purpose.
Fossil fuels: still central in times of crisis
Fossil fuels remain dominant in the global energy system and continue to provide the scale and flexibility most economies depend on. Oil, gas, and coal are still deeply embedded in transport, heating, industry, and electricity generation. In a crisis, this existing infrastructure matters. It explains why capital continues to flow into upstream oil and gas, LNG, refining, storage, and fuel logistics even as clean energy investment grows. The IEA’s World Energy Investment 2025 report estimates that about USD 1.1 trillion is still going to oil, gas, and coal in 2025.
The current Middle East disruption has strengthened that logic. In its April 2026 Oil Market Report, the IEA said global oil supply fell by 10.1 million barrels per day in March, describing it as the largest disruption in history. It also reported that restrictions on tanker movements through the Strait of Hormuz and attacks on energy infrastructure had sharply reduced flows and tightened market balances. At the time of the report, North Sea Dated crude was around $130 per barrel, about $60 above pre-conflict levels. Reuters reported on April 23 that Brent was still above $100 per barrel.
This matters because Hormuz is not simply a regional route. The U.S. Energy Information Administration says oil flows through the strait averaged 20 million barrels per day in 2024, equal to around 20 percent of global petroleum liquids consumption. It also accounted for more than one-quarter of global seaborne oil trade and about one-fifth of global LNG trade. Even where alternative pipelines exist, they cannot fully replace these volumes. This means that disruption in Hormuz quickly becomes a global energy and price shock.
For investors, this reinforces the short-term case for fossil fuel exposure. In unstable conditions, hydrocarbons still offer what markets value most: scale, dispatchability, established infrastructure, and the potential for rapid returns when prices rise. LNG import and export infrastructure, storage, and refining assets become particularly important in periods of supply disruption. Europe’s response to reduced Russian pipeline gas already showed how quickly energy security concerns can drive investment into these areas. The Middle East shock strengthens the same pattern.
Renewables: strategic value beyond climate policy
At the same time, the case for renewables has become stronger. Their value is no longer only about emissions reduction or falling technology costs. Renewables increasingly matter because they reduce dependence on imported fuels and exposure to geopolitical shocks. Once installed, solar and wind assets are largely insulated from fuel-price volatility, which gives them an important strategic advantage in today’s market.
The latest investment figures reflect this. According to the IEA, global energy investment is expected to reach about USD 3.3 trillion in 2025, with around USD 2.2 trillion going to renewables, nuclear, grids, storage, low-emissions fuels, efficiency, and electrification. This is roughly double the amount going to fossil fuels. The report also makes clear that growth in clean energy investment is being driven not only by climate policy, but also by industrial policy and energy security concerns.
This shift reflects a broader change in how energy risk is understood. A solar or wind project may require high upfront capital, but it avoids one of the most disruptive variables in current markets: imported fuel costs. For countries that rely heavily on energy imports, this matters greatly. Renewables are increasingly seen not just as clean energy, but as part of a national resilience strategy.
Why the current shock supports both tracks
The recent Middle East conflict also shows that energy shocks affect more than crude prices. Reuters reported on April 23 that Asia’s crude imports had fallen sharply because of the Iran war and Hormuz disruption, forcing refiners to cut runs and threatening diesel and jet fuel supply. This is particularly important because many Asian refineries depend on Middle Eastern crude grades that are well suited for producing middle distillates. Replacing those supplies is not simple, and the result can be higher transport costs, pressure on aviation, and wider inflationary effects.
The IEA reported similar effects, noting that Asian and Middle Eastern refineries had cut runs sharply and that product markets were tightening. This means the current shock is not only about upstream supply loss. It also affects refining, product availability, and end-user fuel costs. In such a context, investment in local generation, electrification, grids, and storage becomes more valuable because it reduces dependence on fragile international fuel chains. At the same time, these investments do not remove the short-term need for oil and gas, especially in transport, industry, and balancing power systems.
This is why the energy landscape is increasingly defined by parallel investment tracks rather than a simple shift from fossil fuels to renewables. Fossil fuel investments remain necessary for immediate stability and supply security. Clean energy investments are growing because they support long-term resilience and reduce exposure to imported fuels. These priorities now coexist, and pursuing both increases overall capital requirements.
Current constraints and strategic choices
Renewables still face important constraints. Intermittency, grid bottlenecks, permitting delays, and financing costs continue to limit how quickly they can replace conventional generation. In many systems, gas-fired power remains essential for balancing variable renewable supply. At the same time, clean energy technologies also depend on concentrated supply chains for components and critical minerals, creating new forms of geopolitical exposure.
For investors, this means a portfolio approach is more realistic than a binary choice. Short-term exposure to fossil fuels, LNG, storage, or selected midstream assets may still offer attractive returns in a volatile market. At the same time, long-term positioning in renewables, grids, storage, and electrification remains essential because these investments reduce the structural vulnerabilities now shaping energy markets.
For policymakers, the lesson is similar. Energy policy can no longer be judged only by cost or emissions. It must also be judged by resilience. Strategic reserves, diversified import routes, and emergency supply tools remain important, but so do domestic renewables, stronger grids, storage, and local energy value chains.
Balancing resilience and transition
Global energy uncertainty has not produced a simple return from renewables to fossil fuels. Instead, it has reinforced investment in both. The disruption around the Strait of Hormuz has shown how quickly physical supply shocks can affect shipping, refining, fuel prices, and wider economic stability. At the same time, it has strengthened the strategic case for renewables, grids, storage, and electrification as tools for reducing external exposure.
The real challenge for governments and investors is therefore not choosing one path over the other. It is managing the coexistence of both under conditions of geopolitical stress. In that environment, energy is no longer just a commodity. It is a core element of economic security and resilience.