The escalation of the Iran conflict has once again made it clear how vulnerable the fossil fuel–based global economy is. As tensions in the Middle East intensified, energy prices immediately began to rise, as markets reacted to the risk of supply disruptions. This crisis is therefore not merely a geopolitical development, but also a reminder that energy security and the green transition are deeply interconnected strategic issues.
The escalation of the conflict in the Middle East has once again shown how strongly the global economy depends on fossil energy sources—and how quickly energy markets react to this dependence. The attacks by the United States and Israel against Iran, as well as Iran’s responses, have created significant uncertainty in the global energy system. The conflict has shaken energy markets particularly because it directly affects one of the world’s most important energy trade routes: the route passing through the Strait of Hormuz.
Approximately 18–19 million barrels of oil pass through the strait every day, accounting for nearly 20 percent of global consumption; therefore, any military or political tension immediately appears in energy prices.
The geopolitical cost of fossil energy
It is therefore no surprise that following the outbreak of the conflict, oil prices rose rapidly and once again exceeded 100 dollars per barrel. Market reactions are driven not only by actual supply disruptions, but also by the so-called geopolitical risk premium: the additional cost that markets build into prices due to conflicts, the vulnerability of transport routes, and uncertainty of supply.
The functioning of energy markets has long shown that the price of fossil fuels depends not only on production costs or the balance of supply and demand. Geopolitical risks often add a significant premium to prices. According to some estimates, uncertainty related to conflicts around Iran alone may have increased oil prices by 5–15 dollars per barrel for decades.
This phenomenon highlights the geopolitical exposure of the fossil energy system. A significant share of global oil and gas production is concentrated in a few regions, while consumption is global. As a result, supply is highly sensitive to conflicts, sanctions, or even temporary disruptions to maritime transport routes.
The economic impact of the current conflict quickly appeared in Europe as well. Rising energy prices may create inflationary pressure and slow economic growth. According to some analyses, the current oil shock could reduce global GDP growth by as much as 0.3 percentage points, while increasing inflation by more than half a percentage point.
Hungary’s exposure is also very high: in 2024, 78% of the country’s natural gas consumption and 87% of its crude oil and petroleum product consumption came from imports (based on Green Policy Center calculations comparing domestic production data with official consumption statistics). Looking at total energy supply, import dependence is well above 60%, which is considered high. Even in periods characterized by favorable prices, the cost of energy imports consumed 3–4% of Hungarian GDP, while during the energy crisis this temporarily rose above 10%.
History has already shown the way
However, the current situation is by no means without precedent. The oil crises of the 1970s—especially the 1973 Arab oil embargo and the supply disruptions following the 1979 Iranian Revolution—caused similar shocks to the global economy. The explosive rise in energy prices at that time also made it clear that economies were overly dependent on imported fossil fuels.
One of the most important consequences of these crises was that many countries began to develop energy efficiency programs, strategic oil reserves, and energy diversification policies. One of the core principles of modern energy policy—the strengthening of energy security—emerged during this period.
As a symbolic response to the crisis, the first solar panels were installed on the White House in the United States. In other words, the solution to preventing such crises has been known since the 1970s: an energy system based on renewable energy sources.
Renewables and energy sovereignty
In contrast to fossil fuels, renewable energy sources—such as solar and wind—operate according to a fundamentally different logic. These sources are not concentrated in a few geopolitical regions, but are practically available to every country, unlike attempts to scale up domestic fossil fuel extraction.
This means that renewables are not only tools for climate protection, but also instruments of energy sovereignty and energy security. If a country produces a significant share of its energy within its own territory, it becomes less exposed to international conflicts, price volatility, or geopolitical pressure.
Furthermore, the functioning of modern societies is based on the close interdependence of energy, water, and digital infrastructures; in crisis situations, these are not disrupted separately but simultaneously, since drinking water extraction, telecommunications networks, and data centers all require a continuous electricity supply. An energy-related problem can quickly trigger a domino effect, evolving into a complex security-of-supply crisis.
International climate policy leaders have also drawn attention to the lessons of the conflict. According to Simon Stiell, Executive Secretary of the UNFCCC, the Iran war is a “stark warning” that dependence on fossil fuels is not only an environmental issue, but also an economic and national security risk. According to Stiell, the spread of renewable energy can reduce this vulnerability, as they are “cheaper, safer, and faster to deploy” than fossil-based systems.
The European Union’s strategic response
The issue of energy dependence is particularly important for the European Union. For a long time, the EU’s energy system has relied heavily on imported fossil fuels—especially oil and natural gas.
However, geopolitical developments in recent years—the war in Ukraine, the decline in Russian gas supplies, and now the conflict in the Middle East—have made it clear that this dependence represents a serious strategic risk.
Therefore, EU energy policy is placing increasing emphasis on the rapid expansion of renewable energy sources, the development of energy storage technologies, and the improvement of energy efficiency. These measures not only serve emission reduction, but also strengthen the security of energy supply.
Climate policy as a security policy tool
The current energy crisis increasingly shows that climate protection and security policy are not separate fields. A system based on fossil fuels simultaneously drives climate change and creates geopolitical vulnerability.
For this reason, more and more experts emphasize that climate policy must be integrated into security policy planning. According to the Green Policy Center’s latest policy recommendations, climate change and energy dependence are risk factors that directly influence the stability of states, economic performance, and social security, and therefore require integrated responses.
This is particularly true for Central and Eastern Europe, where economies have traditionally been highly dependent on imported energy sources. An energy system based on renewable sources is therefore not only an environmental objective, but also a strategic investment in security, resilience, and the domestic economy.
The weather dependence of solar and wind energy can be mitigated by adopting their optimal 2:1 ratio, as well as through energy storage and demand-side response, while in the case of geothermal energy, biogas, and certain other renewables, this issue does not arise. (Although nuclear energy is often seen as a tool for energy independence in public discourse, due to its low-carbon production, independence from weather conditions, and the storability of fuel, it is important to note that Hungary is unable either to produce or to dispose of nuclear fuel, meaning that it actually entails a dual dependency.)
The Iran conflict once again highlights that an energy system based on fossil fuels not only accelerates climate change, but also creates geopolitical vulnerability. By contrast, an energy system based on renewable energy sources can simultaneously reduce emissions, import dependence, and price volatility. The green energy transition is therefore no longer merely an environmental objective; it is increasingly one of the key conditions for energy security and economic stability.
