How the world is coping with the war in Iran: Europe cushions the impact, China bets on self-sufficiency

Six months after the US and Israeli attacks on Iran began, the consequences of the conflict are shaping the energy transition in practically every region of the world. The impact varies most according to the level of dependence on imports, domestic resources and governments’ ability to balance the goals of ensuring energy affordability, security of supply and long-term sustainability.

Europe has been hit particularly hard by the conflict because of its dependence on oil products from the Persian Gulf: almost half of the EU’s jet fuel imports and roughly a fifth of its diesel imports pass through the Strait of Hormuz. The impact on jet fuel supplies has nevertheless been milder than initially expected, partly thanks to weaker demand, alternative imports and higher output from European refineries.

Europe’s power sector is more resilient to higher gas prices than it was at the start of the war in Ukraine. Renewables now account for 35% of electricity generation across five major European markets, compared with 24% in 2021. Lower demand has also helped soften the price shock.