US-Iran Conflict Triggers Global Energy Supply Shock

A conflict between the United States and Iran has entered its fifth month, triggering a significant global oil and gas supply shock. While analysts initially predicted oil prices would surge to 200 dollars per barrel, prices remained below 130 dollars and dropped under 85 dollars by August 2026.

Market stability resulted from several coordinated factors. The government of China acted as a swing consumer by reducing seaborne crude imports by 40 to 50 percent. Simultaneously, Saudi Arabia and the United Arab Emirates rerouted oil outside the closed Strait of Hormuz, while the United States released its Strategic Petroleum Reserve. Increased production in Libya and the Americas further mitigated the shock.

Despite the official closure of the Strait of Hormuz, dark shuttles—tankers with disabled AIS transponders—continued to move 3 to 5 million barrels per day through the waterway. The crisis has accelerated the transition to domestic energy and renewables in developing nations and highlighted the resilience of coal. However, the period also exposed European supply chain vulnerabilities, specifically climate-driven droughts causing record low water levels on the Rhine and Danube rivers.