Supply disruptions and rising prices linked to the Iran war are prompting governments to reassess energy priorities. Alongside emissions targets, policymakers are paying closer attention to whether fuel can be supplied consistently, electricity can reach consumers and costs can be kept manageable. This does not mean the energy transition has stalled or that fossil fuels have prevailed. It underscores a practical constraint: economic and political pressure can undermine policy goals when energy is unavailable where and when it is needed.
Gulf producers seek alternatives to the Strait of Hormuz
Before the war, about one-fifth of global oil and liquefied natural gas trade passed through the Strait of Hormuz. A threat to the waterway can prevent otherwise available supplies from reaching consumers, prompting Gulf producers to put greater emphasis on alternative transport routes.
Saudi Arabia and the United Arab Emirates are expanding pipelines and other infrastructure to move more oil to ports outside the Persian Gulf. HSBC Group Chief Executive Georges Elhedery has said investment in alternative routes could significantly reduce dependence on the Strait for oil shipments within five years. LNG dependence is harder to unwind quickly: the practical value of alternative routes remains constrained by shipping options and infrastructure.
Saudi Arabia is also building up storage capacity. Saudi Arabia and Singapore announced on October 26 plans for crude oil storage arrangements at Jurong Rock Caverns in Singapore, with operations expected to begin in the second half of 2027. The project is intended to strengthen Singapore’s energy security and improve Saudi Arabia’s resilience if supply chains in Southeast Asia are disrupted. Its focus is not on adding production, but on making existing oil more dependable to deliver to market.
Qatar secures US LNG as Asia adds Pacific supply
LNG highlights how geography shapes energy security. Qatar is one of the world’s leading LNG suppliers, but almost all of its exports pass through the Strait of Hormuz. Unlike crude oil, LNG cannot simply be rerouted through existing oil pipelines. Building an alternative export system would require moving large volumes of gas elsewhere and investing in costly liquefaction and export facilities.
QatarEnergy has begun securing long-term US LNG supply. Under a 20-year agreement announced this week, the company will purchase up to 3 million tonnes a year from Woodside Energy’s Louisiana LNG project. Deliveries are expected to start in 2030, and QatarEnergy will be among the project’s largest buyers. Export facilities on the US Gulf Coast can supply Atlantic Basin customers without transiting Hormuz. North America also has extensive pipelines, storage facilities and production areas. US supply can face disruptions too, but it gives buyers a significant source beyond the Persian Gulf.
Canada is also expanding supply options for Asia. Phase 2 of the Canada LNG project was approved in September, raising annual capacity at the Kitimat facility in British Columbia from 14 million tonnes to 28 million tonnes. Located on the Pacific coast, the project offers Asian customers a new large-scale LNG source that bypasses Hormuz and requires a shorter journey to Asia than shipments from the US Gulf Coast. Shell cited supply diversification and energy security among the factors behind its decision.
European gas prices climb again
After Russia’s invasion of Ukraine, Europe rapidly cut its reliance on Russian pipeline gas and turned to LNG from the United States and other suppliers. That strategy helped the region avoid the severe shortages many had feared, but also increased its exposure to global LNG markets. Disruptions to Middle Eastern supplies amid renewed geopolitical conflict have again drawn attention to that dependence.
In late October, Europe’s benchmark gas price rose above €100 per megawatt-hour for the first time since 2022. Traders were watching disruption risks to Middle Eastern LNG supplies, colder weather and tightening inventories. Europe has not abandoned its climate targets, but heating costs, refinery output, electricity prices and fuel availability have returned as immediate policy pressures.
The price move alone does not show that the energy transition has failed. It does, however, highlight the need to consider energy security and system resilience alongside emissions cuts. Renewables, transmission networks, storage, diversified gas supply and dependable power generation each have a role, and policy planning must account for them together.
US nuclear and grid investment target dependable power
Nuclear power is back in the energy security debate. Nuclear plants can generate electricity continuously without relying on the steady delivery of imported fuel. Cost, nuclear waste and the retirement of aging reactors remain challenges, but rising electricity demand and supply shocks have renewed attention to nuclear power’s ability to provide firm output.
On October 27, the US Department of Energy announced a plan for up to $5 billion in conditional loan commitments for Constellation Energy projects to uprate and modernize nuclear units in Illinois, Maryland and Pennsylvania. The department said the projects could add nearly 1.1 gigawatts of capacity to existing plants. Gas-fired plants can support intermittent power sources, batteries can shift electricity across time, and transmission lines can move power from areas with ample supply to those facing shortages. Each addresses a different reliability need.
US electricity demand is rising after years of limited growth, driven by data centers, manufacturing, electrification and population growth. At the same time, much of the transmission infrastructure was built decades ago and is poorly suited to today’s generation mix and demand levels. As a result, sufficient generation does not guarantee that power can reach the fastest-growing regions in time. Transmission expansion, grid modernization, demand response, distributed generation and storage are becoming important parts of ensuring delivery.
Distributed solar can reduce reliance on centralized power sources at certain times. Batteries can provide capacity during peak demand and help stabilize the grid. Demand response and virtual power plants can temporarily adjust electricity use, reducing the need for additional generation capacity. Each has limitations, but using them together can give the system more room to manage disruptions.
The transition increasingly relies on a mix of technologies
The Iran war has not shown that renewables should be abandoned, nor does it mean every fossil fuel project makes economic sense. Solar, wind, batteries, efficiency measures, nuclear power, natural gas, pipelines, LNG facilities and transmission networks all have different costs and limitations. The shift is that a preference for any one technology alone is increasingly inadequate to address supply disruptions and the challenge of delivering electricity.
Governments may expand renewables, extend the operating lives of some nuclear plants, add storage, reinforce grids or build oil and gas transport routes that avoid vulnerable waterways—all at the same time. Backup capacity and alternative routes require additional investment. But when pipelines fail, shipping lanes close, power plants go offline or conflict interrupts supply, a lack of redundancy can carry a greater economic cost. Energy events in 2026 have again shown that system resilience has a real cost as well as economic value.
From transport plans around the Strait of Hormuz to LNG diversification, European gas prices and US nuclear and grid investment, markets and policymakers are increasingly focused on whether energy can reliably reach consumers. Having sufficient resources is only part of the equation: transport, storage, generation and transmission must also work when needed.