Less than a week has passed since military strikes by the U.S. and Israel targeted Iran. Oil prices spiked immediately and have continued a steady climb as the threat of a protracted conflict grows. Qatar has suspended its liquefied natural gas (LNG) exports, and Saudi Arabia has taken a major refinery offline. The conclusion of this crisis remains uncertain.

Regardless of how the situation unfolds in the near future, it underscores a persistent shift: energy markets are moving toward fragmentation after decades of becoming more interconnected. As geopolitical tensions rise and trade partners become less dependable, nations are prioritizing energy security above all else. This was an existing trend that the conflict in Iran is now accelerating.

The consequences will be significant. Nations are increasingly likely to depend on energy resources available within their own borders. This reduction in trade, coupled with higher complexity, could result in more expensive energy for some regions. Regarding the transition to green energy, the Iran crisis highlights two competing pressures: a desire to implement domestic clean energy more quickly, and the reality that fractured supply chains may make doing so more difficult and expensive.

As the global energy landscape transforms, the war in Iran serves as the latest major disruption. “The traditional strategy of relying on well-integrated, global markets still has its merits,” Jason Bordoff and Meghan O’Sullivan wrote in Foreign Affairs last year. “However, it may provide less security as these markets fragment and energy is increasingly used as a geopolitical weapon.”

Geographic limitations have always played a crucial role in defining energy markets and society at large. John D. Rockefeller established his dominance by managing the infrastructure—including refineries and pipelines—that linked oil sources to urban centers. The U.S. oil blockade against Japan was a factor leading to the attack on Pearl Harbor. Similarly, the 1973 oil embargo by Arab nations in response to U.S. support for Israel sparked an energy crisis that evolved into a major political upheaval.

Over time, however, markets for oil, gas, and coal became more integrated through globalization. For oil, a global network of tankers and pipelines created a unified marketplace. The growth of LNG has similarly allowed natural gas to be traded on a global scale. As infrastructure for gas trade expanded recently, it appeared the commodity might eventually operate within a fully globalized system.

That perception of free trade in energy vanished following Russia’s 2022 invasion of Ukraine. European nations turned to the U.S. and Qatar to secure gas supplies, while also working to increase domestic renewable energy and exploring the expansion of nuclear power.

The conflict in Iran has further damaged confidence in global energy commerce. Iran has effectively obstructed the Strait of Hormuz, a critical waterway through which over 16 million barrels of oil typically pass each day, according to Rystad Energy. Meanwhile, Qatar, a leading LNG exporter, has completely halted its gas production, leaving buyers in Asia and Europe in a difficult position.

These circumstances will likely benefit the renewable sector. Nations are eager to develop any available energy sources as quickly and affordably as possible. For many, especially those lacking fossil fuels, this means prioritizing solar and wind power. However, the shift isn’t universal. Countries with abundant fossil fuels, like the U.S., are doubling down on those resources, while others, like India, are seeing simultaneous growth in both coal and renewables.

Other obstacles remain: a more divided world may hinder access to the technologies needed for clean energy. A 2023 report from the International Monetary Fund suggested that trade barriers affecting critical minerals could decrease investment in electric vehicles and renewables by 30%.

When the current instability eventually subsides, the emerging energy system will likely be more durable, though more costly. Further efforts will be required to ensure this system is also more environmentally friendly.

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