Renewables surge expected after oil crisis shakes global markets: IEA

Global energy systems are undergoing a structural shift away from fossil fuels following a recent oil crisis linked to the US-Israel war on Iran, the head of the International Energy Agency said, warning of lasting consequences for energy markets.

Fatih Birol, the agency's executive director, said the disruption had fundamentally altered perceptions of fossil fuel reliability. "The vase is broken, the damage is done – it will be very difficult to put the pieces back together. This will have permanent consequences for the global energy markets for years to come," he said, reports The Guardian.

The crisis, which exposed vulnerabilities in supply routes including the Strait of Hormuz, has shaken confidence in oil and gas. "Their perception of risk and reliability will change. Governments will review their energy strategies," Birol said, adding that the scale of the shock was "bigger than all the biggest crises combined, and therefore huge."

He also expressed concern about the fragility of global supply chains. "I still cannot understand that the world was so blind-sided, that the global economy can be held hostage to a 50km strait."

According to the IEA, the loss of trust in fossil fuels is accelerating investment in alternative energy. "There will be a significant boost to renewables and nuclear power and a further shift towards a more electrified future," Birol said, pointing to changes that could permanently reduce oil demand.

Economic factors are reinforcing the transition. Birol said renewable technologies—particularly solar—are now cost-competitive with coal, including in developing countries. "I never heard that anybody ever regretted" building renewables; "I don't see any downsides for renewable energy."

The shift is expected to feature prominently at an upcoming international conference in Colombia, where more than 50 governments are due to discuss a coordinated response and the transition away from fossil fuels.

In the United Kingdom, the crisis has intensified debate over North Sea oil and gas projects, including the proposed Jackdaw and Rosebank fields. The controversy centres on whether the government should grant production permits for sites that already hold exploration licences but have not yet been cleared for extraction.

The governing Labour Party has pledged to halt new exploration licences but has not clarified its position on projects already in development, drawing pressure from industry groups and political opponents.

Birol said new fields would do little to improve the country's energy security. "...these fields would not change much for the UK's energy security, nor would they change the price of oil and gas. They would not make any significant difference to this crisis," he said.

He added that additional production would not significantly reduce consumer costs. "They will not lower the bills, the UK will remain a significant importer and price taker on international markets. I am not even talking about the climate change effects – just from a business point of view, making a major investment in exploration might not make business sense."

An unnamed Labour source said the government welcomed Birol's position, stating: "We are delighted that the world's leading energy economist has reiterated his endorsement of a fair and managed transition in the North Sea."

Analysts have also questioned the economic case for new developments. Ed Matthew of the thinktank E3G said: "Birol is simply reflecting what every sane, independent energy analyst can see. The UK's fossil fuel reserves have been depleted by 90% and will do nothing to bring down bills."

He added: "The only effective path to energy and economic security is homegrown clean energy. All political parties should now be uniting around that mission. Their failure to do so tells you a lot about whose interests they truly represent."

Environmental campaigners echoed those concerns. Tessa Khan of Uplift said "...the oil lobby... has seized on this moment to push for more drilling even as countries rapidly pivot to renewables in response to the conflict."

"Caving into these demands risks tying the UK to a volatile and increasingly outdated fossil fuel system, just as the world moves away from it," she added.

While opposing large-scale new developments, Birol said smaller expansions of existing infrastructure—known as "tiebacks"—could still be viable, as governments balance energy security, costs and the pace of transition.