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It’s been less than a week since the U.S. and Israel struck Iran and turned energy markets upside down. The price of oil jumped quickly and has risen steadily as the prospect of a longer conflagration grows more likely. Qatar has stopped exports of liquified natural gas (LNG) and Saudi Arabia has turned off a key refinery. It’s unclear how this moment may come to an end.
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But, no matter what happens in the coming days and weeks, the crisis reminds me of an ongoing trend: energy markets will continue, if not accelerate, their move toward fragmentation after decades of increasing integration. As geopolitics heat up and trading partners become less reliable, energy security takes precedence—no matter the cost. This trend was already happening; the war in Iran will only speed it up.
The implications will be profound. Countries are more likely to rely on energy sources they can readily access at home. And less trade combined with more complexity could lead to more expensive energy in some places. When it comes to the energy transition, the Iran conflict will bring two contradictory impulses to a head. Many countries will want to deploy clean energy at home faster. But fragmented supply chains may make it harder and more expensive.
As the global energy map shifts, the war in Iran is the latest jolt in this transformation. “The old antidote of integrating into well-functioning, interconnected global markets still provides benefits,” Jason Bordoff and Meghan O’Sullivan wrote in Foreign Affairs last year. “But it may offer less protection as markets themselves fragment and energy is weaponized in new ways.”
Geographical constraints have always been a key factor in shaping not just energy markets but society more broadly. John D. Rockefeller built his empire by controlling the infrastructure—refineries, railroads, and eventually pipelines—that connected oil fields with the cities that needed the commodity. The U.S….
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