Donald Trump’s brilliant idea of joining the blockade of that Strait should be considered the equivalent of coming to the aid of a strangulation victim by pressing a pillow over his or her face. The shortages hit first in Asia (particularly reliant on fuel flows from the Strait of Hormuz) and Africa and then in Europe. The German air carrier Lufthansa only recently cut 20,000 summer flights for fear of fuel shortages (and it will undoubtedly prove all too typical). Nor will the U.S., despite having its own supplies of oil, escape such negative developments. While there have been oil price crunches before, as in the 1970s and 1980s, this one is different. It’s a watershed moment globally, heralding the Ragnarök — the Norse “twilight of the gods” — of petroleum.
Forced to Run on One Engine
While American drivers have been complaining this spring about high prices at the pump, in the Netherlands and Denmark consumers are already paying the stunning equivalent of around $10 a gallon. In Asia, where reliance on petroleum that travels through the Strait of Hormuz is enormous, the situation is far worse, since there are already distinct shortages of fuel of a staggering and still growing kind. Philippines President Ferdinand “Bongbong” Marcos, Jr., recently declared a national energy emergency, as his country had only a little over a month’s worth of petroleum left. Hundreds of gas stations, nearly 3% of the country’s total, announced temporary closures, resulting in long lines at those that remained open.
South Korea, which unwisely dragged its feet when it came to turning to green energy, is now scrambling to find just three months’ supply of petroleum from non-Hormuz sources, but the world’s 10th-largest economy faces a potential economic cataclysm. The government has already restricted parking for commuters. The rise in gasoline costs has led many consumers to simply stay home if they can, spurring a buying spree of novels and video games. South Korean President Lee Jae Myung, a human rights lawyer, implicitly blamed Israel’s blatant disregard for International Humanitarian Law for the calamity, engaging in a days-long internet flame war with Tel Aviv in early April.
In Bangladesh, the state-owned Eastern Refinery has been forced to close due to a lack of crude oil to process. Meanwhile, the government has allowed gasoline and diesel prices to rise by 11% to 15%, putting pressure on the costs of transportation, agricultural production, and consumer items, while creating endless lines for what gasoline remains. With boat operators, ferries, and fishing boats unable to secure enough diesel fuel for their motors, a whole range of livelihoods are being hurt. As Al Jazeera reported, Bangladeshi ferry operator Abir Hussain typically offered this complaint: “We are struggling to maintain our regular schedule. We are forced to run on just one engine to conserve diesel, due to the fuel shortages.”Heavily dependent on fossil gas for its electricity plants, Bangladesh has already suffered widespread outages, harming factories and schools — and, of course, even if the Strait of Hormuz were to reopen soon, the pain throughout Asia is likely to be long-lasting.
Stagflation
Oil price crises are hardly new. Because of a boycott of Europe and the United States by Arab oil producers during the 1973 Arab-Israeli War, and the rising power of the Organization of Petroleum-Exporting Countries (OPEC) cartel, the price of petroleum actually quadrupled between 1970 and 1980. That energy crisis produced economic malaise in the United States, where the economy became afflicted with “stagflation” — both stagnation and inflation, two phenomena not usually found together.
So much capital flowed to the oil states of the Persian Gulf then, particularly Saudi Arabia, Kuwait, and Iran, that President Richard Nixon and Secretary of State Henry Kissinger schemed to avoid deflation in the U.S. by pressuring those countries to buy enormous amounts of American military equipment. Over the decades, that oil-arms nexus would drive the United States toward ever more ruinous conflicts in the Gulf region, since arms manufacturers and oil companies, two of the more influential corporate sectors in American politics, had a motive for lobbying repeatedly to get Washington to intervene there. And of course, their behind-the-scenes pressure to continue the country’s forever wars in that region would be bolstered by the Israel Lobby.
The Islamic Revolution in Iran in 1978-1979, the Iran-Iraq War of 1980-1988, the Gulf War of 1990-1991, and the Russian invasion of Ukraine in 2022 were all further shocks to the energy system. The major industrialized countries responded to such challenges by increasing their fuel efficiency, while switching to nuclear power, coal, and natural gas for ever more of their electricity and heating. In the U.S., in part because of government regulation, the average passenger car went from a fuel efficiency of 13.5 miles per gallon in 1975 to 27.5 miles per gallon by 1985, while global per capita use of petroleum declined after the 1970s oil shock and has never recovered.
The Great Hormuz Fuel Crisis
The Great Hormuz Fuel Crisis of 2026 has the potential to permanently reduce petroleum demand far more radically. The deadlock in the Strait of Hormuz has all the hallmarks of a chronic ailment. After all, Israel and Iran have struck each other four times now — in April and then October 2024, in the 12-day war of June 2025 (when President Trump joined in), and again this spring. None of those four military actions successfully established Iranian deterrence, leaving Tehran eternally vulnerable to further Israeli and U.S. strikes.
And yet Israeli Prime Minister Netanyahu’s determination to destroy Iran’s industrial base has also failed so far. Of course, that doesn’t mean the Israeli elite won’t try again once their country and the U.S. have built back up their depleted stores of interceptors and so become more confident that Tel Aviv will be able to withstand further Iranian ballistic missile and drone barrages. In addition, Iran’s new claim that, from here on in, it will have the right to charge tolls for passage through the Strait of Hormuz, though it may have some support in international law, is unacceptable to the U.S., the Arab Gulf states, and Israel, and so forms an irritant likely to lead to further conflict.
In short, Israel and the United States have destabilized the Persian Gulf and global oil and natural gas supplies for the foreseeable future.
How different today’s crisis is from the Middle Eastern one set off by Washington’s Operation Desert Storm, aimed at expelling the Iraqi military from Kuwait in 1991. Since the strength of Baathist Iraq then lay in its armored forces, the U.S. and its allies could use their own armor and air power to bottle them up inside Iraq and deny that country’s military the ability to further destabilize the Persian Gulf region.
In contrast, since then Iran has put much of its military energy into ballistic missile and drone production, weapons that, no matter what the U.S. and Israel do, can continue to strike sites across the Middle East. While petroleum prices doubled during the Iraqi occupation of Kuwait in 1990, they quickly fell once it was over. Subsequent losses from sanctions on Iraq and oil fires in Kuwait were offset by increases in OPEC production, especially in Saudi Arabia. That country is, in fact, one of the few major swing producers left in the world. The U.S. and Russia still produce a great deal of crude oil, but they use most of it themselves. On the other hand, because of its vast oil fields and small population, Saudi Arabia can vary its production, lowering it when the price falls too low for its liking and increasing it substantially during a crisis.
Phantasmagoric Assertions
At the moment, however, the Saudis can’t substantially offset the shortfall in crude oil through Hormuz because it’s caught up in the crisis itself and its pipeline to the Red Sea has limited extra capacity; nor, despite President Trump’s phantasmagoric assertions, can the U.S., since it’s not a net exporter but a net consumer of crude oil. It is, however, a net exporter of liquid hydrocarbons, including hydrocarbon gas liquids (HGLs), primarily propane, which make up about 25% of total U.S. gross “petroleum” exports. Propane, however, is mainly used for heating buildings and you can’t fill up on HGLs at the pump. Since gasoline and diesel prices are set by the world market, the U.S. production of crude will not keep American prices at the pump from rising.
The oil supply for vehicles is relatively inelastic. And yet a world that used roughly 104 million barrels a day of petroleum in 2025 has been limping along this spring with as little as 92 million barrels a day, while chronic shortages loom, even once the Strait of Hormuz is reopened, since numerous major refineries in the region have been badly damaged. Demand also will remain relatively inelastic as long as owners locked into vehicles with internal combustion engines have to keep on buying gasoline and diesel fuel (no matter how high the prices go) to get to work, ensuring that those prices will remain elevated until the supply increases substantially.
The Hormuz crisis, however, differs from past oil shocks in significant ways. As a start, it’s happening at a time when scientists are discovering ever more unsettling consequences from fossil-fuel-caused climate change — most recently, a potentially calamitous slowdown in or possibly even future collapse of the crucial Atlantic Ocean current system by midcentury, which could have a devastating impact on the planet. As a result, wise governments have an increasing motivation to enact policies encouraging the electrification of public transport of every sort and so much else as well.
In addition, the recent conflict in the Strait of Hormuz signals an ongoing geopolitical volatility in the heart of oil country that may not subside, even though the latest oil war has arrived at a time when there is an increasingly robust alternative to gas-powered transportation in the form of electric vehicles (EVs), to which consumers are already switching in striking numbers. Countries are also turning ever more to wind and solar power, no small thing since the crunch in the Strait also affects the global distribution of natural gas from Qatar. The five countries in the European Union with the most green energy are set to save nearly $10 billion more in costs than fossil-heavy EU countries.
The Elephant in the Showroom
In the United Kingdom, EV sales spiked a record 24% in March over the same month last year. Moreover, there was a potentially game-changing turning point there, as the average cost of an electric vehicle for the first time fell below that of a similar gasoline-powered car. Meanwhile, renewable energy generation in England also swelled strikingly.
Asia, however, was the place that saw the most dramatic changes. Vietnam now makes its own electric car, the Vinfast, and its sales skyrocketed by 127% in March. Some 40% of new vehicle sales there last year were already electric, a percentage that is expected to rise rapidly in the wake of the Strait of Hormuz disaster. Vietnamese schoolteacher Dao Thi Hue caught the mood of the moment while visiting a Vinfast dealership by saying, “Driving an EV is so much better than driving a petroleum vehicle, in terms of costs and also in terms of saving fuel, queuing to fill up.”
Of course, the elephant in the global EV showroom is China. In 2024, it produced more than 12 million electric, hybrid, and fuel-cell vehicles (also known as “New Energy Vehicles”). That figure amounts to 70% of global production and EVs accounted for 53% of new car registrations in China last year. Moreover, China already has the ability to produce 20 million EVs annually, so it is only producing at 65% capacity. And the rush to buy electric vehicles isn’t just focused on passenger vehicles but also on heavy trucks.
Although domestic sales in China faced some headwinds because government incentives for such purchases lapsed late last year, March sales of 1.25 million New Energy Vehicles there were up slightly from the previous year and recent sales were up 67% from this February’s. The big news, however, is that Chinese EV growth was driven primarily by exports, a record 371,000 units in March, a 130% increase over the same month in 2025. Chinese lithium battery exports were also up in the first quarter by 50.1%, a figure that is only expected to grow as the effects of the Hormuz blockade tear through the world economy. Overall, China’s Greentech exports are surging.
Periodic Shocks
Count on this: ever more consumers are likely to purchase electric vehicles globally, since they’re immune to the periodic price shocks caused by Persian Gulf instability. Moreover, their sticker prices continue to fall. New discoveries of lithium resources and new, less expensive batteries also promise to bring their prices down even further. Moreover, China’s Contemporary Amperex Technology Company (or CATL), a giant battery manufacturer, has just announced that it has developed a new battery that will enable an electric vehicle to travel 932 miles on a single charge (which, by the way, would only take six and a half minutes to complete).
These are potentially internal-combustion-engine-killing developments. Governments of countries lacking significant oil resources like India are already committing themselves to vast build-outs of charging stations and creating ever more incentives to buy EVs and phase out gas-driven vehicles. Because the Hormuz crisis is hitting Asia (with its vast population of 4.8 billion people) hardest, the new and somewhat frantic commitment by so many of its governments and its consumers to the electrification of transport will have the effect of further dropping prices globally for electric batteries and other technology and so will be pivotal in the fight against climate change.
In short, count on one thing: however devastating the immediate effects of the disaster in the Strait of Hormuz, the latest horrific Iran war is also helping to change the world forever in ways that could prove positive indeed.
