By Lina Irawan 
The immediate aftermath saw panic ripple through commodity markets. The explicit threat of disruptions and looming shortages pushed countries across Asia, particularly those heavily dependent on Middle Eastern energy like China, Japan, South Korea, and India, to enact emergency measures. These included the imposition of export bans on refined fuels, a sharp cut in import duties to ease the burden on consumers, and the implementation of fuel rationing programs to maintain critical supplies and prevent a complete economic meltdown. The International Energy Agency (IEA) issued stark warnings, and global shipping insurers hiked premiums, reflecting the heightened risk in one of the world’s busiest maritime lanes.
Yet, six months since the onset of the war, the most dire "doomsday scenarios"—catastrophic price spikes pushing oil to $150-$200 a barrel, interminable lines at gas stations, widespread power outages, and the grounding of international flights—haven’t quite come to fruition. While global markets certainly experienced severe turbulence, with Brent crude briefly surging to $126 per barrel, a combination of increased production from alternative sources and the strategic deployment of hefty national stockpiles blunted some of the immediate damage, preventing a full-blown energy collapse.
A fragile semblance of normality, or at least a new operational reality, appeared to be returning to the Strait. In a surprising development, Iran announced on Wednesday a new revenue-sharing agreement concerning the waterway. However, the accompanying statement from a military spokesperson, blaming the U.S. for "obstructing this process," underscored the deep-seated mistrust and ongoing geopolitical friction that continue to define the region. This paradoxical announcement—a deal emerging amidst accusations—highlights the complex interplay of economic necessity and political posturing that now governs access to the Strait.
Despite the temporary reprieve, the overarching revelation of how easily and effectively Iran managed to threaten, and for a period, continue to obstruct, one of the world’s most important waterways has fundamentally reshaped global energy strategy. Governments and corporations worldwide are now scrambling to diversify their sources of energy and rethink their supply chain vulnerabilities. The prospect of a U.S.-Iran de-escalation deal, once a glimmer of hope, now appears to be on life support, with diplomatic channels seemingly exhausted. Consequently, Iranian control over the Strait of Hormuz, or at least its capacity to disrupt it at will, now looks secure for years to come. This grim reality suggests that the factors that saved the global oil market in the first half of the year—primarily existing stockpiles and surge production—might not be sufficient to avert a deeper crisis if tensions persist or escalate.
"Global oil and gas supply is still a major point of geopolitical leverage," asserts Saul Kavonic, head of energy research at MST Financial, articulating a sentiment now widely shared across the industry. "Notwithstanding the rise of alternative and green technologies over the past decade, the global economy is still very reliant on oil and gas. Hostile actors can threaten that for their geopolitical ends." This statement encapsulates the core lesson learned: energy security is inextricably linked to geopolitical stability, and the world remains precariously dependent on conventional fossil fuels, making it vulnerable to regional conflicts.
A ‘Big Wake-Up Call’ for Global Energy
Before the war, the Strait of Hormuz was more than just a shipping lane; it was the world’s most critical energy chokepoint. Roughly a fifth of the world’s total oil trade—approximately 21 million barrels per day—passed through this narrow maritime corridor, which sits strategically between Iran and Oman. An even more significant proportion, over 80% of that cargo, was destined for energy-hungry Asian markets, primarily fueling the economies of China, India, Japan, and South Korea. This concentration of supply through a single, geopolitically volatile point represented an Achilles’ heel that few truly appreciated until it was directly threatened.
"Before this crisis, many market observers would have told you it would be impossible to block or completely close the Strait of Hormuz, because a country like Iran did not have the capabilities. They tried in the 1980s during the Iran-Iraq War, but they did not succeed," explains Carole Nakhle, CEO at Crystol Energy, a prominent energy consultancy. The "Tanker War" of the 1980s saw both sides attack oil tankers in the Gulf, but a full, sustained blockade of the Strait proved beyond Iran’s then-limited capabilities, especially against a formidable international naval presence.
However, the recent conflict demonstrated a stark evolution in Iran’s asymmetric warfare capabilities. The war has shown "how easy and inexpensive it has become to threaten very expensive energy infrastructure," Nakhle adds. Relatively cheap, commercially available drones, weaponized with precision munitions, proved capable of putting multibillion-dollar refineries, pipelines, ports, and other critical energy facilities at severe risk, effectively challenging traditional naval dominance. Iran’s naval strategy, focused on swarms of fast attack craft, naval mines, and sophisticated anti-ship missiles, augmented by drone technology, presented a credible and persistent threat that disrupted commercial shipping and forced a reassessment of maritime security protocols.
"This has been the big wake-up call for the entire global energy industry. It’s a fundamental paradigm shift of the last 50 years of the energy industry," emphasizes Kavonic. "We’re moving from just-in-time supply chains to just-in-case supply chains." The traditional model of optimizing efficiency and cost through lean, tightly integrated supply chains is now being re-evaluated in favor of redundancy, resilience, and strategic depth, even if it comes at a higher cost. This shift has profound implications for global trade, manufacturing, and investment.
Energy importers, acutely aware of their newfound vulnerabilities, are aggressively pursuing diversification. Japan, for instance, found itself particularly exposed. Before the war, the Middle East accounted for a staggering 90% of Japan’s crude oil imports and roughly 11% of its liquefied natural gas (LNG). "Japan found it was more vulnerable than expected, particularly when it comes to LNG—it imports 100% of its energy," says Kavonic. The country’s dense urban centers and highly industrialized economy are critically dependent on an uninterrupted flow of energy. "In Japan, if the LNG doesn’t arrive, the lights go off and the country shuts down."
In response, Tokyo is now investing heavily elsewhere to shore up future supplies. Japan’s Inpex, a leading energy company, for example, formed a joint venture to significantly expand its LNG investment in Australia’s Northern Territory, a region seen as a stable and reliable source. This move is part of a broader push to reduce Japan’s reliance on Middle Eastern energy and build stronger energy partnerships with politically stable nations.
The shift is creating new opportunities for other energy players. "It’s boomtime for Woodside and Chevron, two big LNG players who aren’t too concentrated in the Middle East. The oil majors are now also rapidly ramping up their investment in LNG," Kavonic observes. This surge in investment is driven by the recognition that buyers are willing to pay a premium for diversification, seeking to secure their gas supplies from regions less susceptible to geopolitical disruptions.
Exporters, too, are diversifying their routes. For oil producers in the Persian Gulf, the major lesson has been the urgent need to invest in alternate export infrastructure. This includes ploughing billions into building out new ports and expanding existing ones on both the western side of Saudi Arabia (on the Red Sea) and the Gulf of Oman, effectively bypassing the Strait of Hormuz entirely. These ambitious projects aim to provide direct access to international shipping lanes without navigating the contested Strait. Oil producers are also investing heavily in new pipelines and expanding existing ones, such as Saudi Arabia’s East-West pipeline, which transports crude from the Kingdom’s eastern oil fields to the Red Sea port of Yanbu. If all these additional investments pan out, industry analysts project that only 10% of the world’s oil will need to travel through the Strait of Hormuz, down from 20% before the war, significantly reducing global vulnerability.
However, liquefied natural gas (LNG) presents a far more complex challenge. Unlike crude oil, which can be rerouted through pipelines—perhaps from oil producers in the Persian Gulf to ports on the western side of the Arabian Peninsula—gas cannot currently be transported in the same manner. This means that if the Strait of Hormuz were to face a prolonged, full blockade, there are virtually no alternative routes to get the vast quantities of LNG produced in the Gulf to its primary markets in Asia.
Qatar, one of the world’s leading producers and exporters of LNG, finds itself in an especially precarious position. Heavily reliant on the Strait for its exports, Doha is actively pursuing a multi-pronged strategy to mitigate the risks. This includes intensified diplomatic efforts to de-escalate regional tensions, aggressively seeking new customers outside Asia to broaden its market base, and taking rare opportunities to push its product through the Strait during windows of reduced threat. Qatar has also announced ambitious plans for a fast recovery timeline, ensuring it can restart full production and export operations swiftly once the Strait reopens, demonstrating both foresight and adaptability in the face of persistent threats.
Escaping an Energy Collapse: The Unsung Heroes
The fact that things didn’t collapse as catastrophically as analysts feared at the beginning of the conflict is a testament to several critical factors and some unsung heroes of the global energy market. In April, for instance, the head of the International Energy Agency (IEA) delivered a grim prediction, warning that flights might soon need to be grounded in Europe due to acute jet fuel shortages. While oil prices did surge to as high as $126 per barrel, they notably did not hit the $150 to $200 a barrel level that some analysts had initially feared. And while several Asian countries did impose emergency measures to conserve fuel, a lengthy and catastrophic shortage never materialized. "The global market is proving to be more resilient to major supply shocks than many thought," Kavonic concludes, reflecting on the surprising stability.
One primary reason for this resilience was the sheer amount of oil sitting in strategic reserve. The IEA, an autonomous intergovernmental organization, mandates that its 32 member countries collectively stockpile at least 90 days’ worth of net oil imports as an emergency buffer. Similar mandates for natural gas stockpiles were imposed across Europe after Russia’s invasion of Ukraine, underscoring a growing global emphasis on energy security. In a coordinated and decisive response in March, the agency orchestrated the release of 400 million barrels from these emergency oil stockpiles, the largest such intervention in its nearly 50-year history. This massive injection of crude into the market served as a crucial shock absorber, mitigating the immediate supply deficit caused by the Hormuz disruptions.
Beyond strategic reserves, major oil producers like the U.S., Saudi Arabia, and the UAE also increased their production and carrying capacity. The U.S. shale industry, renowned for its agility, ramped up output, while OPEC+ members Saudi Arabia and the UAE, despite prior agreements to limit production, found ways to boost supply to stabilize the market amidst the crisis. These increases, though not always immediate, provided a vital offset to the constrained flows from the Persian Gulf.
However, perhaps the unsung hero in stabilizing the market was China, which drew heavily on its own massive strategic and commercial stockpiles. While most attention focused on Western reserves, China’s quiet release of crude left more oil available in the international market for other economies, preventing even fiercer competition and higher prices. This move had profound implications. "OPEC has lost its primary role as global oil market manager," Kavonic posits, referring to the cartel that historically tried to maintain global oil prices through supply management. "It’s now moved to China."
Kavonic notes that China’s increased leverage in oil markets will have far-reaching repercussions throughout the Pacific. "We can see how dependent Pacific Island nations are on diesel to keep the lights on. So we’ve seen countries in Asia not just have to manage their own imports but support the Pacific as well. Otherwise, 30 years of Pacific policy could be undermined in a few months." China’s ability to influence global oil flows and provide critical energy assistance to vulnerable nations significantly enhances its geopolitical sway in a region already characterized by intense strategic competition.
But how long this unexpected resilience can last is increasingly unclear, particularly now that tensions between Iran and the U.S. have flared up again, with diplomatic efforts stalled. A prolonged closure or consistent disruption of the Strait of Hormuz now looks increasingly likely for the foreseeable future, testing the limits of global energy security.
"We spent the last four months living on the oil market credit card. And if we continue at that rate, that credit card will be maxed out in a few months," Kavonic warns, painting a stark picture of dwindling strategic reserves and limited spare production capacity. The temporary measures that averted a catastrophe in the first half of the year are not sustainable long-term solutions. The world’s energy system is entering a new era of heightened risk, where the "just-in-case" mentality will become paramount, driving significant investments in diversification, alternative routes, and resilient supply chains. The Iran war, and the vulnerability it exposed in the Strait of Hormuz, will undoubtedly be remembered as a pivotal moment that fundamentally reshaped the global energy landscape for decades to come.
Fortune will host several sessions on what a more complicated geopolitical world means for Asia’s businesses at the upcoming Fortune Leaders Forum, hosted in Macau on Sep. 8. Learn more here.
