The energy world is changing, and a new world order is in the making. Demand destruction, growing interest in alternative routes to the Straits of Hormuz, and the possible accelerated transition to alternative energy are the contours of the emerging new energy order.

The ongoing crisis in the Middle East, the blockage of the Strait of Hormuz and the associated rise in energy prices are resulting in ‘demand destruction’. Last week, the International Energy Agency (IEA) said that “demand destruction” has begun to unfold. The damage is done: the global oil crisis has changed the fossil fuel industry forever, the IEA executive director Fatih Birol told Fiona Harvey of The Guardian.

The upheaval in the energy world ‘will accelerate a shift toward renewables, nuclear power and electrification at the expense of oil demand,’ he added. The damage to confidence in fossil fuel security is permanent, and countries exposed to the Strait of Hormuz will rethink how much geopolitical risk they are willing to embed in their energy systems.

“Their perception of risk and reliability will change. Governments will review their energy strategies. There will be a significant boost to renewables and nuclear power and a further shift towards a more electrified future,” Mr Birol said, adding that this shift will result in “permanent consequences for the global energy markets”.

After a slump over the last couple of years, the current crisis has given a fillip to the rush to electric transport

The Hormuz blockage has brought to the fore another major issue — global dependence on maritime chokepoints. The world is now scrambling to look for alternative routes. They have lost confidence in the Straits of Hormuz. This is no good news for the Persian Gulf oil exporters. This may force some serious consideration of oil export alternatives, points out Mark Gollom of CBC.

“I think the risk is now crystallised in everyone’s mind. Everyone but Iran is going to want to avoid this situation in the future,” Mr Gollom said, citing Jim Krane, co-director of the Middle East Energy Roundtable at Rice University’s Baker Institute for Public Policy in Texas. “So, they need workarounds.”

However, options are limited.

One possibility for Saudi Arabia, the world’s top exporter, is to divert its crude to its Yanbu port on the west coast. Almost 90 per cent of Saudi oil is extracted from fields in the country’s eastern region. Currently, it mainly uses the Ras Tanura port on the east coast to ship crude via the Strait of Hormuz.

To use Yanbu port as its main export terminal, Saudi Arabia will first need to divert its oil to the port on the Red Sea in the West via its 1,200-plus-kilometre East-West pipeline. This pipeline has a maximum capacity of seven million barrels per day (bpd), and some of this volume will also be required to feed its refineries in the West of the country. Not all is thus meant for export. Further, Saudi Arabia, the global gas station — as it is often called — is yet to stabilise flows at this level, Bloomberg reported.

Shipments of crude to overseas destinations from Yanbu averaged about 4m barrels a day in the first three weeks of April, data compiled by Bloomberg shows. That’s about five times as much as Saudi Arabia exported on the route before the conflict in Iran started, but still only about 80pc of Riyadh’s target.

The price of solar panels has fallen by 99.9pc since 1970s, the cost of wind power has fallen by 91pc since 1984, and battery prices have fallen by 99pc since 1991

Further vessels from Yanbu generally pass through Bab al Mandab. That is within the range of Houthi militias and is vulnerable to their attacks.

There’s also the UAE’s Abu Dhabi Crude Oil Pipeline (ADCOP), connecting its Habshan field in Abu Dhabi to the port of Fujairah on the Gulf of Oman. This route bypasses the Hormuz choke point.

But the total capacity of both of those routes is just around 8.5m bpd. “That indicates a need for much more alternative capacity,” Kenneth Medlock, a professor of economics and an expert in global energy at Rice University’s Baker Institute, said in an email to CBC News.

He said there is some capacity from Iraq to the Eastern Mediterranean via Turkey for about 1.6m barrels a day. But it may not reach full capacity. Currently, only 300,000 bpd is flowing through this pipeline. Expanding the Kirkuk-Ceyhan pipeline remains an option. “We are still short of the capacity needed to bypass the Strait fully,” Mr Medlock added. “But there is tremendous interest in alternative routes now.”

The supply hiccup has also given ‘significant’ stress on alternative energy. China, the world’s largest oil importer, is leading the way, striving to reduce its dependence on crude oil via the Straits of Hormuz. President Xi Jinping has called on the country to accelerate its transition to renewable energy.

The crisis is bringing about a fundamental change in the overall perception. Regular supply of crude oil is now in question. It is no longer as reliable as it was before the war. It is expensive and unreliable, while renewables are becoming comparatively cheap, reliable and secure.

Countries are moving to reduce their dependence on oil. This can have a lasting effect, write Wesley Morgan and Ben Newell in their piece in The Conversation.

During the Middle East oil shocks of the 1970s, oil prices tripled and then doubled again. Authorities responded by improving energy productivity to do more with less. The world’s final oil demand per capita peaked in 1979 and has never recovered. The impact this time could be much greater, The Conversation’s story underlined.

Since the 1970s, the price of solar panels has fallen by 99.9pc, the cost of wind power has fallen by 91pc since 1984, and battery prices have fallen by 99pc since 1991.

The process is again in motion. The European Union is set to accelerate electrification after its fossil fuel bill increased by more than $36 billion since the end of February. France has doubled government aid to help households switch to EVs and electrify home heating. Import-dependent South Korea is planning to double renewable capacity within the next four years. After a slump over the last couple of years, the current crisis has given a fillip to the rush to electric transport. The trend has changed.

And though President Trump continues with his ‘drill, baby drill’ mantra, despite that, for the first time, more than 50 nations are gathering in Colombia to hash out how to wind down and end their dependence on coal, oil and gas. The conference was planned before the war. But this year’s energy crisis has greatly raised the stakes.

Things are changing on the global stage. The energy world will never be the same as it was on 28 February. But we in Pakistan seem to be going the other way. News is making rounds that Islamabad is planning to levy charges on new solar cells by private individuals. If the government moves ahead, this would be disastrous. Discouraging people from switching to solar and other alternative energy sources does not make sense. Islamabad needs to be wary of it.

The writer is an energy analyst and has delivered talks at the Department of Energy in Washington and the International Energy Agency.

X: @rhusainsyed

Published in Dawn, The Business and Finance Weekly, April 27th, 2026