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<\/a><\/p>\nFor a while, it was.<\/p>\n
Just a month ago, global oil and gas supply was abundant. Oil and LNG producers were ramping up exports, and the markets and analysts prepared for a glut<\/a> in both the oil and gas markets.<\/p>\n But then all that changed overnight.<\/p>\n The Strait of Hormuz, the world\u2019s most vital oil and LNG chokepoint through which 20% of global oil and LNG trade passes, has been off limits for nearly two weeks, wreaking havoc on global markets and energy prices.<\/p>\n Related: Little-Known US Company Lands Important Pentagon Contract in Rare Earth Race<\/a><\/p>\n The shock of soaring oil and gas prices is set to result in spikes in inflation and slowing economic growth, analysts have started to warn.<\/p>\n And governments have come to realize that the massive dependence on Middle East supply is untenable when the shock is so big.<\/p>\n Many countries and analysts were complacent that a closure of the Strait of Hormuz is unlikely to happen, considering that Iran needs the passage, too, to continue exporting its sanctioned oil, mostly to China.<\/p>\n But the Iranian regime is now playing for survival amid an existential threat to the Islamic Republic, and all bets on further escalation are off.<\/p>\n \u201cUS$200\/bbl is not outside the realms of possibility in 2026,\u201d Wood Mackenzie analysts said<\/a> earlier this week.<\/p>\n Routes to bypass the Strait of Hormuz are being activated, but these routes cannot come close to replacing the Strait of Hormuz in full, Amy Myers Jaffe, Director of NYU’s Energy, said<\/a> on a WoodMac podcast.<\/p>\n The routes via the Red Sea do not help Iraq or Kuwait. They carry no LNG, either, and for refined products, there is no pipeline alternative at all, the analysts noted.<\/p>\n Related: Six Stocks That Could Soar in an Era of Regional Instability<\/a><\/p>\n Oil prices were nearing $100 per barrel early on Thursday, even after the IEA announced its biggest-ever<\/a> coordinated release from oil stocks since it was created in 1974 during the Arab oil embargo.<\/p>\n More than fifty years later, the latest war in the Middle East is now making the case for oil and gas-consuming countries to reduce dependence on imported fossil fuels and look to strengthen their self-sufficiency in energy supply, where possible.<\/p>\n \u201cThe dramatic supply disruptions and price spikes unleashed by the latest Middle East conflict are likely to harden the resolve of many governments to accelerate the drive for greater energy self?sufficiency \u2013 and that will include clean energy,\u201d Reuters columnist Ron Bousso wrote<\/a>.<\/p>\n India and China are boosting coal consumption and production, developed north Asian economies are likely to boost nuclear power and renewable energy rollout, and Europe will seek to continue raising the share of clean energy supply.<\/p>\n Homegrown Energy <\/p>\n Fossil fuel importers are scrambling to boost the share of non-oil and gas power generation. South Korea, for example, is accelerating<\/a> the restart of nuclear reactors that are currently under maintenance, with six reactors in total expected back online by the middle of May. The country is also considering reactivating mothballed coal power plants, while President Lee Jae-myung called for a speedier transition to renewable energy.<\/p>\n In India, the Ministry of Coal said<\/a> the country is \u201cready for any unprecedented \u200cdemand for coal\u201d with a total stock of around 210 million metric tons, \u200cwhich would be sufficient for about 88 days of \u200cdemand.<\/p>\n In Europe, the priority is accelerating clean energy while the EU considers<\/a> a potential cap on natural gas prices, European Commission President Ursula von der Leyen said on Wednesday.<\/p>\n In theory, accelerated deployment of domestic solar, wind, and batteries would reduce dependence on fossil fuels for power generation.<\/p>\n But the spike in fossil fuel prices to four-year highs doesn\u2019t make a great case for faster renewables rollout, as the resulting surge in inflation and potentially higher-for-longer interest rates would raise the costs of clean energy materials and installations.<\/p>\n In addition, the rise in renewable capacity additions would not mean anything if they struggle to connect to the grid. Today, global investments in grids are about $400 billion per year. If the world is to meet the expected growth in power demand through 2030, it would need to boost annual grid investment by about 50%<\/a> from $400 billion, the International Energy Agency (IEA) said last month.<\/p>\n Renewables, of course, cannot replace fossil fuels in many industries, including chemicals, and there remains the issue of intermittency and dependence on weather.<\/p>\n Still, the Middle East war is likely shifting the energy dilemma debate from affordability to energy security and self-sufficiency.<\/p>\n By Tsvetana Paraskova for Oilprice.com<\/p>\n