This is a special edition of The Hothouse Chronicles. Our previous series mapped a 2 °C world with collapsed ocean currents, a freezing Europe, a hothouse tropics, and an industrial forecast that already pointed toward a rapid energy transition. But we left one variable out: the geopolitical wild card.
On February 28, 2026, the world changed.
What follows is an updated simulation – not replacing our previous work, but overlaying it with a sudden, brutal accelerator. The Strait of Hormuz crisis has effectively closed the world’s most important energy chokepoint. Global oil flows have been cut by 11 % to 13 %. LNG supply has dropped by nearly a fifth. Prices have soared. And the energy transition, already moving at pace, has been kicked into overdrive.
Let’s walk through what happened, what it means for the industries we forecast, and – because this is a signature of The Hothouse Chronicles – what it means for your home, your car, and your electricity bill.
Part 1 – The Shock: What Actually Happened
On February 28, 2026, U.S. and Israeli forces launched strikes against Iranian nuclear and military facilities. Iran responded not with a conventional counter‑attack, but with a weapon it had been perfecting for decades: the effective closure of the Strait of Hormuz.
Within days, the narrow waterway – through which approximately 20 % of the world’s oil and 20 % of its LNG had flowed – was reduced to a trickle. According to the International Energy Agency (IEA), pre‑war traffic of roughly 130–140 vessels per day plummeted to single digits. By April, only 191 vessels transited the entire month.
What followed was unlike any previous oil shock. As Gregory Brew, a senior analyst at Eurasia Group, told CNN: “What Iran has demonstrated is that it has the power to close the strait and to keep it closed, even in the face of immense US and Israeli bombardment. And that is something that no one will ever be able to take away from them”. Tehran moved to formalise its control, establishing the Persian Gulf Strait Authority (PGSA) to oversee transits – including vetting and, in some cases, transit fees.
The human and economic toll has been immediate. The World Food Programme warned that the crisis has pushed an additional 2.5 million people in Somalia, 1.3 million in Sri Lanka and 2.3 million in Afghanistan into acute food insecurity. U.S. strategic petroleum reserves, tapped to prevent oil prices reaching $150 a barrel, have fallen from around 417 million barrels to approximately 357 million – a drawdown of nearly 60 million barrels. And those reserves, analysts warn, cannot be tapped indefinitely.
Part 2 – The Numbers: Oil, Gas, and the Supply Shock
The scale of the disruption is staggering.
Before the war, the Strait of Hormuz carried approximately 20.9 million barrels per day (bpd) of crude oil and petroleum products, accounting for roughly 25 % of global seaborne oil trade. After the conflict erupted, traffic volumes plummeted to around 5 % of normal levels. According to the IEA’s March 2026 Oil Market Report, crude and refined product flows through the strait have plunged from roughly 20 million bpd to only a trickle.
The IEA estimates that Gulf producers have lost approximately 14 million bpd of effective export capacity since late February. Total global supply loss from the Hormuz closure has reached 12.8 million bpd. As a result, the IEA forecasts that global oil supply will fall short of total demand by around 1.78 million bpd in 2026 – a sharp reversal from last month’s forecast of a 410,000 bpd surplus.
The LNG market has been hit even harder. QatarEnergy, facing a drone strike on its Ras Laffan facility, halted its entire liquefaction capacity of 77 million tonnes per annum (Mtpa). The IEA reports that the loss of almost 20 % of global LNG supply has caused strong price volatility, driving natural gas prices in both Asia and Europe to their highest levels since the 2022/23 energy crisis. Each month without LNG cargoes transiting the strait results in around 10 billion cubic metres (bcm) of LNG supply loss, according to the IEA.
Infrastructure damage extends beyond energy. Approximately 8 % of global aluminium supply passed through the strait, now largely stopped. More critically, about half of global seaborne sulphur – a vital component in the extraction of battery metals nickel and lithium – has been cut off, with prices for delivered sulphur to Asia up 50 % since the war began.
Part 3 – Price Scenarios: From $100 to $200
Oil price forecasts vary depending on the duration of the closure, but all point to sustained elevation.
Wood Mackenzie has modelled three scenarios:
- “Quick Peace” (Strait reopens by June): Brent crude eases to around $80/bbl by end‑2026, softening to $65/bbl in 2027.
- “Summer Settlement” (reopening in September): A shallow global recession in H2 2026, with permanent economic scarring relative to pre‑war baseline.
- “Extended Disruption” (closed through end‑2026): Brent crude prices approach $200/bbl by end‑2026, even as global oil demand falls by 6 million b/d year‑on‑year in H2 2026.
Other forecasters have weighed in:
- Barclays has raised its 2026 Brent forecast to $100 per barrel**, warning that if current disruptions continue through the end of May, prices could rise to as high as **$110.
- Morgan Stanley projects that if the dual blockade persists, oil prices could rise to $120–$130 by late June to early July.
- Continuum Economics puts WTI in Q2 2026 in a range of $90 to $130, depending on negotiation outcomes.
- JPMorgan expects average oil prices at $97 per barrel for the remainder of 2026 if the strait reopens in early June.
The IEA adds a sobering note: even if an agreement were reached today to reopen the strait, normalising transit could take six to eight months. Full restoration of oil and gas transport capacity, including the clearance of approximately 166 ships carrying around 170 million barrels of oil stranded in the Persian Gulf, could take up to three months after that.
Part 4 – The Geopolitical Response: A World in Motion
The response from major economies has been swift and coordinated – though not always effective.
On March 19, 2026, the leaders of France, Germany, the United Kingdom, Italy, the Netherlands, Japan and Canada issued a joint statement condemning Iran’s actions and expressing readiness to contribute to efforts to ensure safe passage through the strait. A broader coalition has since formed, including Spain, Portugal, Sweden, Finland, Poland, New Zealand, the Philippines, South Korea, and several Gulf states.
The IEA authorised a coordinated release of strategic petroleum reserves – approximately 400 million barrels announced in March – but nearly half of that release has not yet reached the market, reducing its effectiveness as an emergency buffer. A new emergency release is not currently under discussion, eliminating that relief valve.
Japan has evaluated releasing up to 80 million barrels from its strategic reserves. The U.S. has continued to draw down its own reserves, but analysts warn they cannot be tapped indefinitely. China, meanwhile, has reportedly used its influence with Iran to secure selective passage for some vessels, but full commercial traffic remains far below normal.
Despite diplomatic efforts, the crisis shows no sign of rapid resolution. Iran has established the PGSA to formalise its control, and the White House has sanctioned the authority while threatening secondary sanctions against companies that pay fees to Tehran. Some oil traders and shipping companies have reportedly made arrangements with Iran in a desperate effort to get oil flowing, but these arrangements are risky and limited in scale.
Part 5 – The Acceleration: How Hormuz Changes the Energy Transition
Here is the central thesis of this special report. The Hormuz crisis is not merely a temporary price spike. It is a structural accelerator of the energy transition.
Fatih Birol, Executive Director of the IEA, put it bluntly: “Governments will review their energy strategies. There will be a significant boost to renewables and nuclear power and a further shift towards a more electrified future, and this will cut into the main markets for oil”. He added that the current crisis is “more serious than those of 1973, 1979 and 2022 combined”.
The IEA’s 2026 World Energy Investment report confirms the shift: global energy investment will reach $3.4 trillion** in 2026. Around **$2.2 trillion is expected to go to grids, storage, low‑emissions fuels, nuclear, renewables, efficiency and electrification – while only $1.2 trillion is set to be invested in oil, natural gas and coal. Despite higher oil prices, oil investment is expected to decline for a third consecutive year.
Investment in renewable power projects is expected to total around $665 billion** in 2026, with **$365 billion going toward solar alone. Low‑emissions sources account for more than 70 % of total power generation investment globally. Nuclear investment is continuing its resurgence, exceeding $80 billion annually, with close to 80 gigawatts of new nuclear capacity under construction across 15 countries.
UNFCCC Executive Secretary Simon Stiell made the strategic case at a preparatory meeting for COP31: “Those who’ve fought to keep the world hooked on fossil fuels are inadvertently supercharging the global renewables boom. Renewables offer safer, cheaper, cleaner energy that can’t be held captive by narrow shipping straits, or global conflicts”.
David Smith, Senior Investment Director of Asian Equities at Aberdeen Investments, told Wealth DFM: “Asia was already building solar, wind and storage at scale for cost and climate reasons. What Hormuz does is reinforce urgency, turning renewables from a decarbonisation priority into a strategic hedge”.
Part 6 – Revised Industry Forecasts: Winners and Losers
With the Hormuz crisis overlaid on our existing 2 °C + AMOC + Southern Ocean collapse scenario, our previous CAGRs need adjustment. The accelerator effect is substantial.
| Industry | Previous CAGR | Hormuz‑Adjusted CAGR | Primary Driver |
|---|---|---|---|
| Precision Fermentation | 43–48 % | 48–53 % | Supply chain shock accelerates search for local protein independence |
| Small Modular Reactors (SMRs) | 35–45 % | 45–50 % | Energy security panic drives baseload investment |
| Cultivated Meat | 40–45 % | 45–48 % | Fertiliser shortages (Hormuz also carries 1/3 of global fertiliser trade) drive alternative protein search |
| Green Hydrogen | 35–38 % | 40–45 % | Immediate demand for dispatchable clean fuel in industry |
| Vertical Farming | 25–30 % | 30–35 % | Food security + fertiliser shortage + local resilience |
| Solar Energy | 15–18 % | 20–25 % | Cheapest energy source; rapid deployment possible in months, not years |
| Wind Energy | 10–12 % | 12–15 % | Offshore wind prioritised for energy independence |
| Habitat / Rewilding | 8–12 % | 10–14 % | Fertiliser prices push shift to regenerative agriculture |
| Synthetic Fuels (E‑fuels) | 15–20 % | 20–25 % | Aviation and shipping scramble for non‑fossil alternatives |
| Battery Storage | 8–12 % | 15–20 % | Grid stability and home arbitrage demand surge |
| Electric Vehicles | 10–12 % | 15–18 % | “Pump anxiety” replaces range anxiety as primary consumer concern |
Losers in the revised forecast: Industries reliant on stable fossil fuel prices, long supply chains through the Gulf, or fertiliser‑intensive agriculture:
- Traditional livestock farming – fertiliser shortages drive up feed costs, accelerating shift to alternative proteins.
- Conventional automotive – high petrol prices accelerate EV adoption, as demonstrated by EU EV registrations jumping 51 % in March.
- Fertiliser‑dependent agriculture – the Strait of Hormuz carried one‑third of global seaborne fertiliser trade; shortages are already acute.
Part 7 – Second‑Order Effects: What the Headlines Miss
Beyond the direct energy impacts, the Hormuz crisis is creating second‑order effects that will reshape industries.
Fertiliser and food prices: The Strait of Hormuz was a major transit route for fertilisers, urea, and other agricultural inputs. The reduction in supply of commodities essential to making artificial fertilisers will reduce global food production. Combined with the loss of 12 million bpd of crude oil production and 3 million bpd of refined products, the agricultural sector faces a brutal triple shock: higher fuel costs, higher fertiliser costs, and disrupted logistics.
Shipping fuel strategy: Once the strait closed and marine gas oil (MGO) doubled, the relative price gap for alternative shipping fuels shifted dramatically. According to the Baltic Exchange, the premium for green methanol over conventional fuel has shrunk to 42 %, and for blue methanol to 15 % – levels that accelerate the commercial case for alternative maritime fuels.
Industrial raw materials: Approximately 8 % of global aluminium supply transited the strait, and that flow has largely stopped. Aluminium prices are rising, affecting everything from aircraft to beverage cans.
Battery supply chains: The sulphuric acid shortage – due to the loss of sulphur shipments through the strait – is now threatening EV battery production. China’s EV and battery storage makers are exposed to any loss of supply of nickel produced using the HPAL method, as well as lithium from Australia. Without sulphuric acid, mines cannot process battery‑grade nickel. This is not yet a crisis point, the longer the strait remains effectively closed, the closer that point becomes.
The “pump anxiety” phenomenon: Polestar CEO Michael Lohscheller told CNBC that “pump anxiety” has replaced range anxiety as the dominant consumer concern. EU EV registrations jumped 51 % in March compared with the same month a year earlier. In Italy, battery‑electric registrations rose 65.7 % in the first quarter; France, 50.4 %; Germany, 41.3 %. The economics have inverted: “People considered EVs for idealistic reasons, and now the decision is all about money”.
Part 8 – The Home Front: Why This Changes Your Payback Period
In our previous series, we made the case for home solar, grid‑connected batteries, and EVs. The Hormuz crisis has made that case significantly stronger.
EVs: Already cheaper, now dramatically so. With petrol prices surging past €2 per litre in many European markets, and U.K. diesel up nearly 45 pence per litre since early March, the operating cost advantage of EVs has widened substantially. In Finland, a typical petrol car cost €16 per 100 km before the crisis. That figure has now risen to over €20. An EV, with home charging at €0.14/kWh, still costs just €2.94 per 100 km. The payback period for the upfront premium of an EV over a petrol car has shortened from 3–5 years to 18–30 months in many markets.
Solar: The payback period just got shorter. Electricity prices are rising in tandem with fossil fuel prices, as gas‑fired power plants become more expensive to run. In markets with high gas penetration, household electricity tariffs have risen 15–25 % since February. That directly improves the economics of rooftop solar. A system that previously saved €743 per year now saves €900 or more, shortening payback from 7.6 years to 5.5–6 years.
Batteries: Spot‑price arbitrage becomes dramatically more profitable. The volatility in wholesale electricity prices – a direct consequence of gas price spikes and supply uncertainty – has made home batteries far more valuable. In Finland, the spread between daily peak and trough prices has widened by 40–60 % since the crisis began. A battery that previously saved €100 per month via arbitrage now saves €150–180. The payback period for a home battery, which was marginal in some configurations, has become compelling for a much wider set of households.
The synergy effect: The combination of solar, battery, and EV – never stronger than now. The battery stores daytime solar power for evening EV charging. The EV can also serve as a backup battery for the home during peak price hours. And with government subsidies expanding in response to the crisis (several countries have introduced or expanded EV purchase incentives), the upfront cost barrier is falling.
The bottom line for your home: If you were on the fence before February 28, 2026, get off it. The economics have shifted decisively in favour of residential clean energy and electric transport. Not out of idealism. Out of pure, hard cash.
Part 9 – The Revised 2060 Outlook: A Faster, Messier Transition
Integrating the Hormuz crisis into our 2 °C + AMOC + Southern Ocean collapse scenario yields a different 2060.
The positives: The energy transition is occurring 5–10 years faster than previously projected. Solar, wind, batteries, SMRs, and green hydrogen are seeing investment and deployment rates that were not expected until the 2030s. Precision fermentation and cultivated meat are being accelerated as food security concerns merge with high fertiliser prices. The term “energy security” has replaced “climate change” as the primary driver of policy, which paradoxically accelerates decarbonisation.
The negatives: The transition is messier and more inequitable. Coal investment is set to rise to $180 billion in 2026 – the highest level since 2012 – with China accounting for almost 70 % of global coal supply spending. Some Asian countries affected by the crisis may seek to keep existing coal‑fired power plants operating for longer to bolster energy security. The transition is not uniform; it is layered on top of a global economic shock that is pushing millions into food insecurity.
The geopolitical landscape: The IEA notes that the current crisis is “expected to leave a lasting imprint on future investment priorities – particularly in Asia and the Middle East, where the impacts of the disruptions to shipping flows through the Strait of Hormuz have been felt most acutely”. Russia, opportunistically, may attempt to re‑enter LNG markets if the crisis extends. China’s EV and battery supply chains are exposed to the sulphuric acid shortage, creating an unexpected vulnerability for the world’s largest EV market.
The 2060 snapshot – revised: A world that reached 2 °C, with AMOC collapsed and Southern Ocean overturning stalled. But a world that also, because of the Hormuz shock, accelerated its energy transition by a decade. The industrial winners are the same as our previous forecast, but with higher growth rates. The losers are those who could not adapt quickly enough – particularly small island developing states, landlocked developing countries, and nations heavily dependent on imported fertilisers and fossil fuels.
Part 10 – Conclusion: The Catalyst We Didn’t Want, But Needed
The Strait of Hormuz crisis of 2026 is a humanitarian and economic disaster. It has pushed millions into food insecurity. It has disrupted global supply chains. It has raised the risk of wider conflict. It is, in every sense, a tragedy.
And yet – if one looks at the energy system alone – it is also the catalyst that the energy transition needed. Fatih Birol of the IEA made the comparison explicit: “We are in the midst of the largest energy security crisis the world has ever faced – and I believe this will reshape investment strategies globally, with parallels to the major changes the energy world witnessed after the oil shocks of the 1970s”.
The 1970s oil shocks led to efficiency standards, the Strategic Petroleum Reserve, and a lasting shift away from oil in electricity generation. The 2026 Hormuz shock may do the same – but this time, the alternatives are not just efficiency and coal. They are solar, wind, batteries, SMRs, green hydrogen, precision fermentation, and cultivated meat. Technologies that were already scaling have been given a five‑year acceleration.
For policymakers, the lesson is clear: energy security and climate action are not trade‑offs. They are the same thing. For industry, the lesson is equally clear: diversify supply chains, invest in local production, and hedge against geopolitical risk. For households, the lesson is simpler: the economics of solar, batteries, and EVs have just improved. The case was strong before February 28. Now it is overwhelming.
The road to 2100 is still long. The Hothouse Chronicles will continue to map it. But one thing is certain: the path is now being walked faster than anyone expected.
Next time on The Hothouse Chronicles: How the Hormuz crisis is reshaping global agriculture – from fertiliser shortages to the accelerated rise of precision fermentation.
Citations for this report
- IEA. (2026). Gas Market Report, Q2‑2026.
- IEA. (2026). World Energy Investment 2026.
- Wood Mackenzie. (2026). Horizons report on Strait of Hormuz scenarios.
- Kpler & Lloyd’s List Intelligence. (2026). Vessel transit data.
- IMF & World Food Programme. (2026). Food security assessments.
- Barclays. (2026). Brent crude price forecast.
- Morgan Stanley. (2026). Oil price scenarios.
- Continuum Economics. (2026). Straits of Hormuz scenarios.
- Rystad Energy. (2026). Gas market analysis.
- BCA Research. (2026). LNG market analysis.
- Aberdeen Investments. (2026). Asia renewables investment note.
- Polestar. (2026). Q1 earnings and commentary.
- European Automobile Manufacturers’ Association. (2026). EV registration data.
- UNFCCC. (2026). COP31 preparatory meeting statements.
- Baltic Exchange. (2026). Shipping fuel strategy analysis.
- Council on Foreign Relations. (2026). Climate Realism Initiative Newsletter.
- FPIF. (2026). The Hormuz Choke Point and the Twilight of Petroleum.