The 2026 Iran War Sparked the Biggest Energy Crisis in History, Now Go

As oil prices soar and the Strait of Hormuz remains effectively closed, the allure of energy self-sufficiency is growing worldwide. Experts warn this instinct could make things worse.

Within days of US and Israeli airstrikes on Iran on February 28, 2026, the world found itself in the grip of the largest energy disruption ever recorded. Iran's near-total closure of the Strait of Hormuz, the narrow waterway through which roughly 20% of global oil and a fifth of global liquefied natural gas transit daily, did what decades of geopolitical instability had never accomplished: it physically severed the world's most critical energy artery.

Oil prices surged 55% in three weeks. Gasoline prices in the United States jumped more than a dollar per gallon. The Philippines became the first country to declare a national energy emergency. Myanmar restricted private vehicles to alternate days. European gas storage fell to just 30% capacity. The International Energy Agency called it "the greatest global energy security challenge in history."

What is energy autarky, and why is everyone talking about it?

Energy autarky, from the Greek autarkeia, meaning self-sufficiency, describes a state in which a country meets all its energy needs domestically, without relying on imports. In practice, full energy autarky is nearly impossible for modern economies. But the concept has surged from academic obscurity to policy mainstream as governments grapple with the Iran shock.

Writing in Foreign Affairs, energy policy scholars Jason Bordoff (Columbia University) and Meghan L. O'Sullivan (Harvard Kennedy School) warn that the crisis is pushing governments worldwide toward a dangerous reflex: the belief that they can wall themselves off from global energy markets. Governments were already intervening more aggressively in energy before the war. The Iran shock, they argue, "may sharply reinforce" this impulse, with potentially devastating consequences.

How the Strait of Hormuz became the world's most dangerous chokepoint

The Strait of Hormuz is a waterway just 21 miles wide at its narrowest point, separating Iran from Oman. Before the 2026 conflict, approximately 20 million barrels of oil per day flowed through it, representing about 25% of global seaborne oil trade. Qatar, the world's second-largest LNG exporter, depends entirely on the strait for its shipments.

When Iran moved to close the strait in early March 2026, Gulf oil production cuts reached at least 10 million barrels per day. Alternative pipeline routes bypassing Hormuz can handle only 3.5 to 5.5 million barrels daily, a fraction of normal traffic. As Al Jazeera energy analyst Nikolay Kozhanov wrote, "Unlike sanctions-driven disruptions, a sustained blocking of the Strait of Hormuz obstructs not only trade routes, but the very ability of producers to export."

Why self-sufficiency sounds appealing but carries hidden costs

The United States produces more oil than any country in the world. Yet turmoil in the Persian Gulf still sent American gasoline prices soaring. For voters promised "energy independence," this felt like a betrayal. The explanation lies in how global oil markets work: oil is a fungible commodity traded on world markets, meaning price increases anywhere affect prices everywhere, regardless of where a country sources its supply.

Bordoff and O'Sullivan identify three key risks of the autarky impulse:

Domestic extraction is often more expensive than acquiring resources through trade. Localizing supply chains may create new bottlenecks if domestic capacity proves insufficient. And restricting exports or shielding consumers from global prices may offer short-term relief but discourages investment, distorts market signals, and ultimately reduces supply. Banning exports of refined petroleum products, for instance, "would cause even greater collateral damage, since refiners would cut back their output."

China has moved furthest toward a managed version of energy autarky, electrifying over 30% of its final energy consumption and building massive strategic oil reserves. But even Beijing remains exposed to disruptions in critical mineral supply chains, on which its clean energy transition depends.

What actually works: resilience, not isolation

The authors argue the goal should not be self-sufficiency at any cost but "systems strong enough to absorb shocks without breaking." This means adding redundancy to supply chains, broadening the pool of reliable energy suppliers, and reducing dependence on any single chokepoint.

Saudi Arabia's oil pipeline to the Red Sea, bypassing the Strait of Hormuz entirely, "has helped more than anything else to offset the supply shortage." Strategic reserves, not only for oil but also for critical minerals, offer another buffer. And the most durable form of energy security, they write, "lies simply in using less energy." The United States is safer from oil shocks today partly because it uses less oil per unit of economic output than it did decades ago.

The ceasefire announced April 8 has done little to resolve the crisis. As of mid-April, the Strait of Hormuz remains effectively closed, with Iran limiting ship transits and even proposing to charge tolls. An estimated 230 loaded oil tankers sit waiting inside the Gulf. Oil prices remain roughly 50% above pre-war levels. Damaged gas fields in the Gulf could take up to five years to rebuild.

The 2026 energy shock has shattered any remaining illusion that the clean energy transition had rendered oil geopolitics obsolete. As Bordoff and O'Sullivan write, "The world never escaped the reality of oil geopolitics." The question now is whether governments will learn the right lessons, or repeat the mistakes of the 1970s.