The 2026 energy crisis in historical perspective
Structural differences compared with the oil shocks of the 1970s and implications for emerging economies
by Alessandro Lanza*
Key points
The near-total closure of the Strait of Hormuz and the outbreak of war in Iran triggered what the International Energy Agency (IEA) describes as the “largest supply disruption in the history of the global oil market”. The price of Brent rose from an initial $70 to $98, before settling at $94 in June. Comparisons with the oil crises of 1973 and 1979 are inevitable, but to draw such parallels, one must consider how much the global energy system and the geopolitical landscape have changed over the past fifty years.
An economy less dependent on oil
One key difference compared with the 1970s is the global economy’s reduced dependence on oil, in terms of both the oil intensity of GDP and oil’s share of the overall energy mix. Thanks to improved energy efficiency and the shift towards natural gas, nuclear power and renewables, oil consumption has become concentrated in a few specific sectors: transport, which accounts for around 58 per cent of global demand for crude oil, compared with one-third in the 1970s, and the petrochemical sector (which includes the production of plastics, fertilisers, solvents, etc.), which has risen from 5 per cent to almost 15 per cent of global oil consumption. Conversely, the use of oil for electricity generation has become marginal, having been supplanted by alternative sources.
A more diverse and flexible range
The second shift concerns the geography of supply. Whilst in the 1970s OPEC’s power was almost absolute, thanks to its 40 per cent share of production, today the landscape includes new players, such as North America (a leader thanks to shale), the North Sea and Brazil. This diversification has made the system structurally less vulnerable. Added to this is greater flexibility, guaranteed by two new tools: spare capacity and the strategic stockpiling system, established in response to the shocks of the 1970s. However, the current crisis is putting these instruments to the test: with the blockade of the Strait of Hormuz, part of the Gulf’s spare capacity risks being ‘trapped’ upstream of the bottleneck.
A more interconnected global economy: the role of trade
Another factor to consider is the extreme interconnectivity of the global economy, which is now more dependent on international trade than it was in the 1970s. International trade has grown 8–10-fold in volume and 40–50-fold in value since 1973. Today, a disruption to the supply of crude oil is not confined to the energy sector but immediately spreads to the entire trade system, over 80 per cent of which takes place by sea. The Shanghai Containerised Freight Index has doubled since the start of the conflict, passing on the rise in costs not only to the price of petrol but also to the value of every imported good.
The weakest link: energy-importing developing countries
Whilst the global economy appears better equipped in terms of energy, the situation is more fragile when it comes to public finances. Total global debt (public and private) exceeds 235 per cent of global GDP, with an imbalance between advanced and emerging economies: the former have an average debt level of around 113 per cent of GDP, with some extreme cases (Japan >230 per cent and Italia 137 per cent), whilst the latter have a lower average debt level (70–75 per cent of GDP), but face borrowing costs that are two to four times higher.
