President Donald Trump spent much of the last year cajoling the world into using more oil and gas. But the war he started is causing some countries to contemplate burning less of them.
Asian countries are mandating work from home policies, fuel rationing and other energy conservation measures. European gas stations have already imposed fuel rationing amid shortages. Major airlines are considering canceling peak summer season flights if the war drags on.
Those moves could represent just the beginning of an unprecedented period of demand destruction, as governments worldwide wrestle with the sudden loss of oil and gas imports from the Middle East. The crisis has the potential to boomerang on Trump, driving countries away from fossil fuels and into the arms of cleaner technologies the president scorns.
“If you have higher prices for longer periods of time, it is going to undermine demand for oil and gas,” said Ira Joseph, a researcher at Columbia University’s Center on Global Energy Policy.
Spot prices for Dated Brent, a gauge of real-time global oil prices, surged above $140 a barrel Thursday, the highest level since the 2008 recession.
Trump has promoted American oil and gas relentlessly since returning to the White House and frequently admonished allies for attempts to green their economies. In a September speech at the United Nations, Trump argued clean energy and climate policies were destructive and that countries needed to purchase more “abundant, affordable energy” from the United States.
“I’ve been right about everything, and I’m telling you that if you don’t get away from the green energy scam, your country is going to fail,” he said.
But faced with a sudden shortage of fuel needed for transport, cooking and keeping the lights on, governments in Europe and Asia have started calling for a faster shift to clean energy.
The Philippines is fast-tracking 1.4 gigawatts of renewables, in what would amount to a roughly 40 percent increase in the country’s wind and solar capacity. European leaders want to ramp up nuclear energy. South Korean President Lee Jae Myung called for a rapid shift to renewable energy this week, saying, “Our future will be at serious risk if we continue to rely on fossil fuels.”
European Commission energy chief Dan Jørgensen warned that the bloc of 27 nations “will not go back to normal in the foreseeable future” and called for building out more clean energy to “truly become energy independent.”
“Going forward, these countries are no longer going to be looking at the current price of fossil fuels relative to renewables, which by the way, renewables are already competitive in a lot of cases,” said Mary Svenstrup, who served as an economics adviser on the National Security Council during the Biden administration. “They’re going to be factoring in potential choke points in fossil fuels and the potential risk and volatility that those energy sources create for them.”
Some world leaders are already panicked. The fighting has resulted in the shutdown of oil and gas shipments through the Strait of Hormuz and damaged energy infrastucture across the Persian Gulf, sending energy prices in much of the world soaring.
“The war in the Middle East has caused the biggest spike in petrol and diesel prices in history,” Australian Prime Minister Anthony Albanese said in a rare national address Wednesday. “Australia is not an active participant in this war, but all Australians are paying higher prices because of it.”
The turmoil unfolding across the globe is largely absent at home. The advent of hydraulic fracturing and horizontal drilling has turned the U.S. into one of the largest oil and gas producers in the world. Countries in Asia rely on the Middle East for around a quarter of their oil supplies and a fifth of their natural gas. While they’re competing with Europe for limited liquefied natural gas cargoes, U.S. natural gas prices Wednesday hit a six-month low.
The U.S. is the country best insulated to the global oil and gas shocks now transforming the world, said Rory Johnston, an oil analyst who writes the newsletter “Commodity Context.”
“The best thing to do right now is to sit pretty and say this is gonna suck, but we are in the best relative position in the world, particularly of major oil consuming regions, to handle this,” he said.
The U.S. is not entirely immune to the economic fallout of the war. Prices at the gasoline pump have climbed steadily since the conflict began and now average slightly more than $4 a gallon nationally. Democrats are using the war to attack Trump on his affordability policies and polls show a growing unease among a public that is mostly experiencing the war through high gas prices.
In a statement, White House spokesperson Taylor Rogers said the president’s “energy dominance” agenda put the U.S. in a position “to not rely on the free flow of oil through the Strait of Hormuz. other countries.” She argued other countries are now seeking to emulate his approach.
“If anything, the ongoing military operations have actually underscored the importance of domestically producing reliable, affordable, and secure energy,” Rogers said. “Many of our allies that have tried transitioning to intermittent and unreliable renewable energy sources have predictably failed to break their reliance on foreign oil that goes through the Strait.”
‘We have plenty’
Fossil fuels have survived conflicts before. Global oil consumption rebounded after a pair of crises in the 1970s while natural gas demand resumed growing after Russia’s 2022 invasion of Ukraine. Indeed, many countries have turned to coal to help stabilize their power systems and offset the sudden loss of LNG. South Korea plans to delay the retirement of three coal facilities. Bangladesh is ramping up coal generation while officials in Thailand and Taiwan are considering whether to reopen shuttered plants.
For many countries, cutting their fossil fuel dependence will be driven more by policy than consumers, said Susan Bell, an analyst at Rystad Energy. The conflict had not pushed the world into a recession yet, she said, despite the early actions from governments to curb consumption and harbor limited fossil fuel supplies.
But the arrival of an energy crisis, a mere four years after Russia’s invasion of Ukraine sent shock waves through global energy markets, could be enough to shake some countries’ views of the future, analysts said. Wind, solar and electric vehicles have all become cheaper and more readily available since 2022.
Countries around the world already subsidized gasoline or diesel, even before the global benchmark for crude topped the $100 a barrel, said Joseph, the Columbia researcher. But if governments shifted those subsidies towards buying additional electric vehicles or installing solar panels, “it could start to cause a significant shift in demand,” he said.
The shift will take time, but “the longer this crisis lasts, and the longer oil prices stay high, the more of an impact it will have,” Joseph said.
It is not clear how much longer that will be. In a national address Wednesday, Trump provided no off-ramp for escalation in Iran and no plan to reopen the Strait of Hormuz.
Countries that depend on the strait for supplies of oil and gas should just “take it,” Trump said. As for those struggling, he offered another suggestion: “Buy oil from the United States of America. We have plenty. We have so much.”
