How the Strikes on Iran Will Reshape the Green Energy Transition

On February 28th 2026, Operation Epic Fury sent shockwaves across the global energy landscape. The joint US-Israeli strike, deploying over 200 fighter jets against 500 targets, killed Supreme Leader Ali Khamenei and decapitated Iran's military leadership. Within days, Brent crude leapt from $63 to $92 a barrel. As Iran launched retaliatory strikes across the Gulf, the Strait of Hormuz, through which roughly 20% of the world's oil flows, nearly ground to a halt. Within hours, European natural gas prices surged 20%. The immediate economic damage is clear. The more interesting question is what it means for the future of clean energy.

The short-term answer is painful. Energy price spikes increase inflation. Goldman Sachs estimates traders are now paying a $14 risk premium per barrel simply to account for uncertainty. A full month-long closure of the Strait could add another $15. When energy becomes this expensive, central banks face pressure to keep interest rates high to control inflation. This has a significant impact on renewables, because wind and solar farms are capital-intensive and are built with borrowed money. Higher borrowing costs make green projects harder to finance. The Iran War will create worse financial conditions for expanding renewable energy.

The damage to global supply chains compounds this. Iran's drone strikes stopped Qatar's liquefied natural gas production entirely. Saudi Arabia's largest oil refinery, Ras Tanura, was hit. Iraqi oil exports were suspended. Meanwhile, urea fertiliser, a third of which passes through the Strait of Hormuz, rose in price by 25% overnight. Food inflation, coupled with energy inflation create political pressure for governments to prioritise immediate relief over long-term investments, such as renewable energy. This is reminiscent of Europe’s response to Russia's invasion of Ukraine, which ultimately cost the continent $1.8 trillion in subsidies.

Even so, the conflict strengthens the urgency for the green transition. The UN's climate chief Simon Stiell put it plainly: fossil fuel dependence leaves economies, businesses, markets and people at the mercy of each new conflict" The UK's Energy Secretary Ed Miliband echoed this, calling the war "another reminder that the only route to energy security and sovereignty is to get off our dependence on fossil fuel markets whose prices we do not control." Expanding renewable capacity is both pragmatic and ideological. Europe entered this crisis with gas storage at 46 billion cubic metres, well below the 77 billion held 2 years ago. Europe’s vulnerability is structural, and the conflicts in both Iran and Ukraine show that renewable energy is the best solution.

Indeed, research across multiple economies consistently shows that a 1% rise in oil prices leads to a significant increase in renewable energy consumption. This is because households and businesses look for cheaper, more predictable alternatives. Christine Figueres, former head of the UN's climate body, made the point succinctly: clean energy has "a predictable cost of zero for fuel." There is no pipeline. Chokepoints are impossible. A regional conflict will not double your heating bill.

The risk is not that the green transition gets abandoned. Given that it is cheap, reliable, and combats climate change, that is unlikely. But governments, under immediate political pressure, could delay it long enough for the next energy crisis to occur. The evidence from 2022 suggests this is exactly what happened: instead of accelerating domestic clean energy production, Europe doubled down on LNG imports, largely from the United States, handing Donald Trump enormous leverage over European energy policy. History could repeat itself.

The strikes on Iran have not changed the economics of renewable energy. If anything, the case for a green transition is stronger. Wind and solar are cheaper to run than oil and gas over the long term. What the conflict has done is show that the stakes are high. Every year of delay is another year of exposure to a world where a single airstrike can add thirty dollars to a barrel of oil and plunge an entire continent into an energy crisis. The transition has always been the sensible option. Now, it is an urgent one.