Iran energy crisis accelerates global shift to renewables, benefiting China
The closure of the Strait of Hormuz in early March, choking off roughly a fifth of global oil and LNG, has triggered energy emergencies worldwide and prompted a political awakening on energy dependence. Countries heavily reliant on imported fossil fuels, such as India and the Philippines, have faced rationing, currency plunges, and political paralysis, while energy-independent states like Pakistan and Brazil have gained geopolitical room to maneuver. The crisis is accelerating investments in renewables, with China—the dominant producer of solar panels, batteries, and EVs—emerging as the primary beneficiary, as its top battery makers have seen combined market value rise by over $70 billion since the war began.
The effective closure of the Strait of Hormuz in early March, choking off roughly a fifth of global oil and liquefied natural gas, has triggered energy emergencies worldwide and is accelerating a global shift to renewable energy that is benefiting China, the dominant producer of solar panels, batteries, and electric vehicles.
On March 24, the Philippines became the first state to declare a national energy emergency. Other countries have imposed rationing, suspended fuel taxes, and negotiated directly with Tehran for safe passage of tankers. Zambia suspended fuel levies for three months, costing its debt-laden government $100 million. Slovenia is rationing fuel.
Qatar declared force majeure on long-term LNG supply contracts to Belgium, China, Italy, and South Korea, warning that its Ras Laffan facility will take years to return to full capacity.
Countries heavily dependent on imported fossil fuels have found themselves politically paralyzed. India, which sees two of every three barrels of its oil imports transit the Strait of Hormuz, did not criticize the United States for sinking an Iranian warship in the Indian Ocean, even though New Delhi had invited the ship for naval exercises. India's foreign secretary took five days to sign a condolence book for the assassinated Iranian Supreme Leader Ali Khamenei. The U.S. loosened sanctions on Russian oil after the strait closed, granting first exceptions to India, and allowed India to buy Iranian oil in March and April.
Energy-independent states have gained geopolitical room to maneuver. Pakistan's share of power from solar energy went from under 3% in 2020 to over 32% by the end of 2025, one of the fastest energy transitions globally. A recent analysis estimated that this solar boom has allowed Pakistan to avoid over $12 billion in oil and gas imports since 2020, with $6.3 billion in savings projected for 2026 alone. Pakistani Prime Minister Shehbaz Sharif and Field Marshal Asim Munir, the country's de facto leader, brokered the April 8 cease-fire between Iran and the United States. In the past two weeks, Sharif has called for renewable energy to become 90% of Pakistan's energy mix over the next decade.
Spain generates over 56% of its electricity from renewables, mostly wind and solar, giving it the lowest energy bills in Europe throughout the war. Its government has refused to let the United States use its military bases for operations against Iran. Brazilian President Luiz Inácio Lula da Silva declared opposition to U.S. strikes on Iran immediately after bombs started falling. Over 80% of cars in Brazil run on motors that can burn either gasoline or ethanol, and the country's grid is nearly 90% hydro, wind, and solar power.
Indonesia's President Prabowo Subianto described the Iran crisis as a "rude wake-up call" and announced plans to build 100 gigawatts of new solar capacity in three years. He has pledged to eliminate Indonesia's fuel subsidies over three years and announced that all vehicles in the country will eventually be electric.
China is the primary beneficiary of the shift. Since the war began, the combined market value of China's top three battery makers—CATL, BYD, and Sungrow—has increased by more than $70 billion, far outpacing the combined value increase of large oil companies even as oil prices have risen. BYD is reporting record sales in Southeast Asia. A Chinese state-owned firm completed one of Southeast Asia's largest solar installations in Laos in April 2026.
The annual ISEAS survey released this month showed that China has overtaken the United States as the preferred superpower partner among Southeast Asian opinion leaders, and that U.S. President Donald Trump's leadership has become their top geopolitical concern.