Hormuz Oil Crisis Revives Lessons from 1973 Arab Oil Embargo

The recent crisis involving the Strait of Hormuz, which saw an effective closure lasting more than 100 days, has caused a significant shock to global energy markets similar to the Arab oil embargo during the October 1973 war.

Although oil and gas supplies continued flowing after the strait reopened, the crisis exposed the fragility of the global energy system, which relies on a complex network of tankers and international trade.

The modern system demonstrated notable resilience during the crisis, as rapid shifts in supply and demand helped avoid a catastrophic scenario that could have occurred if the closure had persisted longer, especially given the heavy dependence of major Asian countries on Middle Eastern energy imports. However, these adaptations, such as drawing down reserves and reducing imports, were not sustainable, indicating that the world was essentially buying time.

This crisis resembles the 1973 shock that caused a sharp rise in oil prices and global inflation, but it unfolds in a more complex and developed world. At that time, the crisis led countries to improve energy consumption efficiency, develop more fuel-efficient vehicles, expand domestic production, and establish the International Energy Agency. It did not end the oil era but made it more efficient.

Today, the threat to energy security in Hormuz could trigger a similar transformation, but with a key difference: the availability of real alternatives such as renewable energy, nuclear power, and the expanded use of electric vehicles. Many Asian countries have begun rethinking their strategies by diversifying energy sources, building local reserves, and reducing import dependence, even if at higher costs.

Europe, following the Hormuz crisis, is accelerating efforts to enhance energy efficiency and increase reliance on renewables, with a clear decline in gas consumption. Meanwhile, global investment is increasingly directed toward clean energy solutions and flexible infrastructure, alongside significant growth in electric vehicle sales and solar energy deployment, particularly in Asia and Africa.

Nevertheless, oil and gas remain essential components of the global economy, especially in transportation, industry, and agriculture. The rising demand for electricity also supports the continued role of gas. Therefore, the transition does not signify an immediate end to the fossil fuel era but marks the beginning of a gradual shift after decades of continuous growth.

Accordingly, the Hormuz crisis may not abruptly end the oil age but could represent a turning point encouraging the world to diversify energy sources, improve efficiency, and accelerate the shift toward alternative energies.