How the closure of Hormuz has opened up energy opportunities
The disruption triggered by Iran’s closure of the Strait of Hormuz has galvanised nations to shore up energy security. Irene Lauro, Senior Economist - Europe and Climate at Schroders outlines how previous oil shocks have shown the ramifications and opportunities could be huge.
The energy shock triggered by the closure of the Strait of Hormuz at the end of February 2026 is reverberating through the world economy, with the full extent of its impact – including likely complex knock-on effects – far from clear. This is the second major energy shock of the 2020s, with many economies still adjusting to the first triggered in 2022 by Russia’s invasion of Ukraine.
Looking further back to comparable shocks of the 1970s highlights the potentially profound consequences that could stretch decades ahead. As nations and trade blocs rush to fortify their energy supplies, they embark on new policy directions with implications touching every industry and asset class. For investors this brings new risks, as well as opportunities. It may, for example, throw open policy revisions relating to hydrocarbon projects. But it could also reinforce the case for a “decarbonisation dividend”, with homegrown, low‑carbon energy reducing import dependency. In this paper we take an investor’s view of the current crisis, seeking to identify likely scenarios to emerge from the disruption and the opportunities these might present.
The energy shock of 2026: who is most exposed – and why it matters
Asian economies are likely to be hit hardest by the disruption. They import more than 80% of the oil and gas shipments that pass through the Strait of Hormuz, leaving them highly vulnerable to supply interruptions and price spikes. Europe’s direct exposure is smaller. It imports only around 5% of its crude oil and 13% of its LNG via the Strait, but it is far from insulated. Energy is priced in global markets, and a scramble for LNG cargoes – with Europe and Asia competing head-to-head – could keep prices elevated for longer.
Vulnerability is greatest where import dependence is highest. In Asia, Japan appears most exposed to rising fossil fuel prices, importing 84% of its energy demand, followed closely by South Korea at around 80%. In Europe, Italy, Spain and Germany import more than two-thirds of their energy. With trade routes disrupted and energy costs rising, these economies face a classic stagflation threat: weaker growth alongside renewed inflationary pressure.
Net imports of fossil fuels
Source: EMBER, Schroders Economics Group, April 2026.
A shock that accelerates structural change
Energy shocks rarely end with a simple reversion in prices. More often, they force a rethink of energy strategy, as governments and companies urgently reassess resilience, diversify supply, and accelerate investment in energy systems that are less volatile and less exposed to geopolitical disruption.
We have seen this pattern before.
History rhymes: the oil shocks of the 1970s
The oil embargo of 1973 and the subsequent supply shock in 1979 exposed a profound vulnerability at the heart of industrial economies: overwhelming dependence on fossil fuels imported from geopolitically unstable regions. The result was not merely a temporary increase in fuel prices, but a structural shift in energy policy across many oil-importing countries.
In the early 1970s, fossil fuel consumption was surging and the industry was booming – until supply was abruptly curtailed. Governments were forced into rapid measures to restrain consumption, and households and businesses had to change behaviour. The lesson was stark: when energy security is compromised, policy responses can be swift and far-reaching.
Click here to read the full piece on the responses to historic energy shocks and for insight from Schroders’ leading energy investors about what this means today.
