Rising tensions in the Gulf are pushing the global energy system into a period of acute vulnerability, as conflict in the Middle East converges with the war in Ukraine and intensifying rivalry among major powers. Nearly half of global oil and natural gas production lies in countries directly or indirectly involved in major conflicts, leaving markets highly sensitive to disruption. With global demand exceeding 100 million barrels per day, even limited escalation could trigger sharp increases in fuel prices, inflation and economic instability worldwide.

At the centre of the crisis is the Strait of Hormuz, through which nearly one fifth of global oil consumption and a significant share of liquefied natural gas exports pass each day. Any prolonged disruption in this narrow waterway would quickly remove substantial supply from global markets, hitting Asian economies first but spreading rapidly through higher prices and financial volatility. The strategic importance of the strait gives Iran significant leverage and raises the risk that a regional conflict could evolve into a broader power struggle.

Higher oil prices benefit major exporters such as Russia and could ease pressure created by Western sanctions, while potentially bringing other sanctioned producers like Iran and Venezuela back into global energy calculations. China has strengthened its energy security through diversified supply routes and reserves, while the United States is likely to prioritise protecting sea lanes. Energy-dependent countries including India, Japan and South Korea face rising economic risks, underscoring how control over vital shipping routes continues to shape global power and geopolitical stability.