The Energy Squeeze: How Middle East Conflict Is Reshaping Global Power Supplies

When conflict flares in the Middle East, fuel prices move the next morning. That is not coincidence — it is the reality of a world that still runs almost entirely on oil and natural gas, and most of that oil flows through one of the most politically unstable regions on Earth. For ordinary households, the consequences show up at the petrol pump, in heating bills, and eventually in the price of groceries. Understanding why this keeps happening is the first step toward changing it.

Why the Middle East Controls So Much EnergyThe numbers are stark. The Middle East holds roughly 48 percent of the world's proven oil reserves. Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, and Iran together pump a significant share of the crude oil that powers global transport, manufacturing, and electricity generation every single day. Much of it travels through the Strait of Hormuz — a narrow waterway between Iran and Oman that is only about 33 kilometres wide at its narrowest point. Approximately one-fifth of all oil traded globally passes through that strait. When warships, drones, or sanctions threats appear in that corridor, traders react immediately, and prices climb before a single barrel is actually delayed.

This concentration of supply in a single region has been a known vulnerability for decades. It was a problem in 1973, when the Arab oil embargo sent fuel prices soaring across North America and Europe. It was a problem during the Gulf War in 1990. It is a problem again today.

One-fifth of all globally traded oil passes through a strait 33 kilometres wide. When that corridor is threatened, the whole world feels it.
What Conflict Does to Energy Markets
Conflict does not have to physically destroy infrastructure to drive prices up. The threat alone is enough. Shipping companies reroute tankers to avoid danger zones, adding thousands of kilometres to journeys and raising transportation costs. Insurers charge higher premiums to cover vessels crossing contested waters. Oil traders buy futures contracts to hedge against potential shortages, which pushes up the benchmark price of crude. All of this happens within hours of a news headline, long before any actual disruption reaches a refinery.

When infrastructure is actually hit — pipelines damaged, terminals shut down, production facilities taken offline — the effects are deeper and longer-lasting. Output drops, existing contracts cannot be fulfilled, and importing nations scramble for alternative suppliers who can charge a premium because demand suddenly outstrips supply. Countries with large strategic reserves can buffer some of this shock, but reserves are finite and rebuilding them is expensive.

Who Pays the Price
The impact is not shared equally. Wealthy, energy-diverse nations can absorb higher prices more easily, though consumers still feel the squeeze. The real hardship lands on lower-income countries and households. Nations in South Asia, sub-Saharan Africa, and parts of Latin America that import most of their fuel and have limited foreign exchange reserves face a brutal choice when oil prices spike: spend scarce dollars on energy imports, or let blackouts and transport disruptions ripple through the economy.

The effects spread beyond fuel. Oil is an input to fertiliser production, and fertiliser is an input to food. Higher oil prices mean higher fertiliser costs, which mean higher food prices. Supply chain disruptions delay goods and raise shipping costs across virtually every category of product. A conflict thousands of kilometres away can quietly raise the price of bread, cement, and medicine in countries that have no stake in the dispute whatsoever.

A Pattern, Not an Anomaly
What is happening now is not exceptional. The 1973 Arab oil embargo, the 1980s Iran-Iraq War, the 1990 Gulf War, the post-2003 instability in Iraq, the 2011 Libyan civil war, and the 2022 Russian invasion of Ukraine — each of these geopolitical shocks sent energy markets into turbulence. The pattern is clear: the world has repeatedly chosen short-term access to cheap fossil fuels over the long-term security of diversified, domestic energy supply. Each crisis passes and the underlying vulnerability remains.

The economic case for change has never been stronger. Countries that build out domestic energy production — whether renewable electricity, biofuels, or green hydrogen — reduce their exposure to geopolitical risk. They keep energy spending circulating in their own economies rather than transferring it to foreign producers. They create jobs that cannot be offshored. Energy independence is, at its core, economic and national security policy.

Building the Alternative
The good news is that the technology to reduce this dependence already exists. Biofuels produced from agricultural and municipal waste can replace a significant share of liquid fuel demand without requiring a single barrel of imported crude. Green hydrogen, made using renewable electricity to split water, can power industrial processes and heavy transport with zero emissions and no geopolitical strings attached. Neither depends on a shipping lane through the Strait of Hormuz.

North America is particularly well-positioned. Canada and the United States have the feedstocks, the land, the engineering talent, and the institutional capacity to build a domestic clean energy sector that makes the region meaningfully more insulated from Middle Eastern supply shocks. The transition will not happen overnight, but every tonne of waste converted to fuel, and every kilogram of green hydrogen produced locally, is one less unit of dependence on imported oil.

 
Nexus BioFuel is part of that transition.

Working across Canada and the United States, Nexus BioFuel converts waste into clean energy and produces green hydrogen using locally available resources. Every project creates jobs in the communities where it operates and reduces the region's reliance on energy supplies that travel through some of the world's most contested waters. The Middle East conflict is a reminder of why that work matters — not just for the climate, but for the economic security of every household that pays an energy bill.