Energy Alternatives Serve National Security Interest as War Strategy May Be Predicated on Oil Price Fluctuations

Eran Yashiv, professor of economics: “Trump is going to stop the war as soon as the economic pain is big enough. … Basically it’s almost zero ships moving. And that disrupts both oil and other energy supply and all the usual trade”

Wars in the Gulf have long exposed a basic weakness in the global economy: too much of the world still depends on fossil fuels moving through a handful of vulnerable choke points. As the confrontation involving Iran, Israel, and the United States unfolds, energy experts say the crisis is once again showing why renewable energy is not only a climate issue but also a national security and economic stability issue. The Strait of Hormuz remains the clearest example. In 2024, oil flow through the strait averaged about 20 million barrels a day, roughly 20% of global petroleum liquids consumption.

That narrow waterway between Iran and Oman functions as the main export route for Gulf oil producers and for much of Qatar’s liquefied natural gas. A disruption there does not stay there. It hits shipping costs, insurance rates, inflation expectations, and investor confidence across the world. That is why each new escalation in the region revives the same question: how long can the global economy remain tied to such concentrated energy risk?

Ivri Verbin, sustainability expert, CEO of Good Vision for Corporate Responsibility, and sustainability partner at Grant Thornton, says the answer lies in decentralizing production.

Our priority should be to invest more in renewable energy and decentralize energy infrastructure. Concentrating all production sites in one region creates strategic vulnerability.

“Our priority should be to invest more in renewable energy and decentralize energy infrastructure. Concentrating all production sites in one region creates strategic vulnerability; it could be damaged by war, natural disasters, or other disruptions,” he told The Media Line.

“Energy diversification is ultimately a matter of national security. Countries need a decentralized ecosystem of energy production, including renewable sources, rather than relying solely on fossil fuels,” he added.

That argument is gaining traction well beyond climate circles. The International Renewable Energy Agency has argued that the energy transition can reduce exposure to acute supply shocks because trade in renewable technologies, electricity, and hydrogen is less vulnerable to cartel behavior and sudden physical shortages than the fossil-fuel system built around concentrated reserves and transit chokepoints.

For Eran Yashiv, professor of economics at the Centre for Macroeconomics at the London School of Economics and at the Eitan Berglas School of Economics at Tel Aviv University, the key issue is how fast economic pain can begin driving political decisions.

Trump is going to stop the war as soon as the economic pain is big enough

“Trump is going to stop the war as soon as the economic pain is big enough, as soon as there are enough declines, if not corrections, in the capital market, and these are forthcoming, he will stop the war. He will declare victory and stop the war,” he told The Media Line.

His point is simple enough: wars are no longer shaped only by events on the battlefield. In a globalized economy, markets can become a second front. If energy prices surge and shipping slows, the pressure quickly spreads through inflation, interest-rate expectations, and trade.

Ivri Verbin.(Eyal Leibel)

“One is that the Strait of Hormuz is literally closed. Trump’s promises to accompany ships and to protect them, and so on, are not worth a lot. Basically, it’s almost zero ships moving. And that disrupts both oil and other energy supply and all the usual trade, including important trade in things needed for food production,” Yashiv noted.

Such disruption goes far beyond crude oil.

“In both oil and gas, there are huge price increases. And that translates into higher inflation,” he said.

“That one thing economists are fearful of is that it might destabilize inflationary expectations, which both actual inflation and inflation expectations mean that central banks all over the world, including the Fed, will stop reducing the interest rate that they’ve been doing,” Yashiv added.

Financial markets have already begun reflecting that uncertainty.

“Last week, the main indices in the US went down between 1.2 and 3%,” Yashiv said.

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“But if this goes on, if this becomes worse … the market could at some point either panic or overreact,” he added.

And if markets wobble long enough, he warned, the real economy will follow.

“Lots of things in the real world, consumption, investment, GDP could go down,” he said. “And I’m talking globally,” he added.

Rajat Ganguly, editor-in-chief of the Journal of Asian Security and International Affairs, says the disruption is already being felt in shipping itself, not just in energy prices.

“The Strait of Hormuz has effectively been blocked for the last eight or nine days. We keep hearing that Iran may make exceptions for Chinese vessels. I am also hearing that they may make exceptions for Indian vessels,” he told The Media Line.

He added that the threat environment alone may be enough to choke traffic.

“There were also reports that parts of the Strait of Hormuz—I’m not sure exactly which sections—may have been mined by Iran. If ships cross those mines, they can literally be blown out of the water,” he said.

“There is also another major problem. Lloyd’s of London, which is the main insurer of cargo and shipping traffic, has raised insurance premiums dramatically because of the risks involved. So that alone becomes a barrier for ships traveling through the strait. All in all, this is not a good situation,” he noted.

The immediate effect, Ganguly said, is visible in consumer prices.

What you can expect from this war, particularly because of the blockade of the Strait of Hormuz, is a rise in energy prices around the world

“What you can expect from this war, particularly because of the blockade of the Strait of Hormuz, is a rise in energy prices around the world. I can already see that in Australia. Before the war started, we were paying about $1.60 per liter of petrol at the pump. In the last few days, it has risen to about $1.90,” he said.

“Energy is connected to almost everything—transportation, food processing, and many other sectors. When energy prices increase, inflation tends to follow. And when inflation rises, people struggle. Many countries could even see social unrest as a result,” he said.

Transportation and freight are rising, too.

“For example, a ticket from the United States to India that used to cost around $2,000 before the war is now close to $3,000,” he noted.

“If shipping is disrupted—not only energy shipments but general cargo shipments—then global supply chains will be affected. And that means some parts of the world could face shortages of essential items such as food and medicine,” he said.

Israel enters the confrontation with a more resilient economy than many of its neighbors, though economists caution against reading too much into stock-market performance alone.

“About the Tel Aviv Stock Exchange, I wouldn’t take it as an important factor. Stock markets around the world, including the New York Stock Exchange, have often been very poor predictors of real economic activity,” Yashiv said.

“The Tel Aviv stock market is small and not very important internationally. In fact, most serious Israeli high-tech companies that want to be traded internationally do not list on the Tel Aviv Stock Exchange,” he added.

Verbin sees the Israeli picture somewhat differently, arguing that markets are pricing future expectations as much as present strain.

“In the short term, of course, there are challenges in many industries. Tourism, culture, hospitality, and trade are all slowing down. But surprisingly, this is also a very strong period for the stock exchange—one of the best periods it has seen,” he said.

But surprisingly, this is also a very strong period for the stock exchange—one of the best periods it has seen

“Many investors estimate that the broader regional geopolitical situation could improve, which may open the door to greater trade with the Gulf states and increased investment from foreign countries, including the United States and Europe,” he added.

Still, he warned that uncertainty remains the real drag.

“The main issue is the high level of uncertainty, because nobody knows when the conflict will end. Economies do not respond well to uncertainty; they function best in stable conditions,” he noted.

Verbin also pointed to Israel’s relative energy cushion.

“Israel now has three main natural gas fields in the Mediterranean, which supply roughly 70% of the country’s energy. Israel also has a very strong high-tech sector that operates largely in global markets rather than the domestic economy. Around 200 Israeli companies are listed on Nasdaq,” Verbin said.

And some sectors are plainly benefiting from wartime demand.

“Wars tend to boost the defense industry. Israel has a large defense-technology sector, and many companies are now receiving significant production requests from European countries seeking to strengthen their security,” Verbin noted.

Iran, by contrast, enters the conflict in far weaker shape.

“I’m not sure who is familiar with current real-time data for Iran,” Yashiv said. “But surely they’ve been in a very bad state already, and they’re surely not getting any better with this war,” he added.

China also has much at stake.

“The Chinese economy is dependent on Iranian oil,” Yashiv noted. “It’s obviously not good news for them either,” he added.

That is what makes this more than another war scare. The crisis is a live demonstration of how the fossil-fuel economy turns a narrow stretch of water into a global pressure point. Renewable energy will not erase geopolitical conflict. But the more power countries can generate at home, across decentralized networks, the less exposed they are to the next standoff in Hormuz. That is the larger lesson here: wars may still start over politics and security, but as long as the world runs on concentrated oil routes, they will keep sending shock waves through everything else.