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Will the Iran conflict drive consumers away from oil and gas?
10/4/2026
News
Wood Mackenzie reports that if the Iran war is prolonged, it will drive structural changes in the world energy system as countries invest to reduce their reliance on energy imports to improve energy security.
A new conflict scenario in Wood Mackenzie’s Lens Energy Transition Scenarios imagines a future where countries invest in electrification, renewables, coal-fired and nuclear power, and move away from globally-traded fossil fuels. Doing so would reduce global oil demand by 20% and gas by 10% by 2050, relative to its base case.
‘Geopolitical crises can act as powerful catalysts for long-term system change,’ said Prakash Sharma, Vice President, Scenarios & Technologies at Wood Mackenzie. ‘In this scenario, the world moves decisively towards energy independence, with lasting implications for global fuel demand and trade.’
The scenario sees a conflict which disrupts 15–20% of global oil and LNG supply resulting in a 9% drop in demand in the near term. Although that demand would gradually recover by 2030, the effect of government actions in the interim will increasingly start to take effect.
By 2050, compared to the base case, this scenario sees a 20% rise in coal demand as an alternative fuel. Nuclear generation would rise by 40%, and hydrogen and carbon capture diminish as they are seen as more costly and less secure.
‘Energy independence reduces exposure to external shocks, but it comes at a structural cost premium,’ said Lindsey Entwistle, Principal Analyst, Scenarios & Technologies. ‘This creates new competitiveness challenges for energy-intensive industries, while advantaging more self-sufficient regions.’
Near-term carbon increases are offset by increased electrification and nuclear deployment, meaning that the scenario aligns in terms of global warming with the Wood Mackenzie base case of about 2.6°C rise in global temperatures.
The latest figures
Crude oil production shut-ins from Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar and Bahrain will rise to 9.1mn b/d in April, from an estimated 7.5mn b/d in March, according to predictions in the US Energy Information Administration’s Short Term Energy Outlook published on 7 April.
All of those countries rely on the Strait of Hormuz for export, which remains mostly blocked. The figures depend on the assumption that shipping gradually resumes and that the conflict does not persist beyond April. If so, it predicts shut-ins of 6.7mn b/d in May, returning to pre-conflict levels late in 2026.
The report predicts the Brent crude oil spot price to peak at $115/b, up from an average of $103/b in March, then falling below $90/b in late 2026, and average $76/b in 2027. However, these figures depend very much on the outcome of the conflict in the Middle East.
