The world is heading towards a prolonged security, economic and energy crisis as a result of the war in Iran. Few countries will be able to avoid threats to their well-being from the war. The countries that rely on renewable energy, however, will fare better than those still locked in a dependence on fossil fuels.
During the first few weeks of the war in Iran, I was anxious: with twenty per cent of the world’s oil supply now being held hostage in the Strait of Hormuz, there was an amplified urgency among petro-states, such as Canada, to quickly ramp up production and our ability to transport crude oil to markets in need. That concern hasn’t diminished, but it has become easier to manage.
The Iran war hasn’t derailed the transition—it has clarified it. The crisis has exposed fossil fuels as geopolitically fragile and economically volatile, something that has been clear to many since the first Gulf War, more than twenty-five years ago.
The result has been that countries are scrambling to backfill depleted supplies of fossil fuels such as coal, crude oil and LNG, while eagerly advancing electrification and renewable energy projects.
Countries with high renewable energy infrastructure are proving more resilient. Wind, solar, and EVs reduce exposure to global fuel markets while electrified systems are less vulnerable to supply shocks. Electrification is now a hedge against geopolitical upheaval, not just a climate abatement tool. Further, this is the first oil crisis in which clean alternatives to oil and gas are both inexpensive and widely available.
During this period of crisis, energy suppliers are pivoting to reliability, not innovation, in energy products. Fossil fuel producers – such as Alberta – are benefiting from high prices and seeking to expand output.
Alberta released its 2026-27 budget on February 26, 2026, just weeks before the outbreak of war, forecasting a significant $9.4-billion deficit for the upcoming fiscal year. Fossil fuel producers are benefiting from high prices and expanding output, and few more than Alberta. Alberta Finance Minister Nate Horner wisely resists sounding too optimistic, but he does believe the current windfall will reduce or eliminate the budget deficit.
China stands alone
China has not escaped the energy crisis triggered by the Iran war, but it has managed it significantly better than most oil-importing economies. The difference comes down to long-term structural choices: diversification, stockpiling, and electrification. This should come as no surprise; China is the global leader in energy transition, driving both its own economic transformation and supporting the transition in nearly every single country in the UN charter.
Bottom Line: Full Steam Ahead
There is no way of knowing what will happen next, in Iran, or wherever else petroleum supplies are threatened by geopolitical upheaval. What is known is that the world outside of a few ideologically inhibited nations is surging forward on an energy transition, for security, climate, and affordability justifications. The disruption of the Iran War will create unforeseen challenges, but the bottom line is that the energy transition is inevitable.
