Trump’s Iran Bombing Will Speed up International Electrification & Biofuels

The June 2025 U.S. bombing of Iran’s nuclear amenities is shaping as much as be a pivotal geopolitical occasion, one whose quick shockwaves lengthen far past army calculations. Inside hours of the U.S. and Israeli strikes on key nuclear websites at Natanz, Isfahan, and Fordow, international oil costs surged sharply. President Trump’s provocative declaration that “Fordow is gone” and his blunt calls for for Iran to simply accept peace rapidly have dramatically heightened uncertainty in vitality markets, underscoring as soon as once more the acute vulnerabilities that accompany reliance on petroleum.

Historical past has repeatedly proven how disruptions centered on the Persian Gulf, whether or not from political upheaval, sabotage, or outright warfare, immediately sends crude oil costs increased. This sample is repeating itself, intensifying pressures on client nations across the globe.

I assembled this essentially coarse perspective this morning, first discovering information sources ample to get at the very least approximate numbers of metric tons of petroleum-based fuels consumed within the 4 international locations / areas, then assessing the close to time period implications via 2030, then extending that via 2050 with coverage and competitors primarily based drivers of transformation. Errors in information gathering, conversion and transcription from 1990 to the current are mine, whereas errors in projection are additionally mine, however in a different way. As at all times, with my projections sooner or later, I don’t declare to be proper, simply much less flawed than most.

The sharp oil worth spike following Trump’s strikes has instantly pushed inflation fears again into the highlight. Already fragile economies, together with the USA, are going through renewed recessionary pressures, dubbed by many analysts because the Trumpcession. American shoppers, uniquely delicate to gas prices as a result of comparatively large distances they drive and fly, and the shortage of alternate options, now see gasoline costs hovering on the pump, instantly squeezing disposable incomes. This quick hit to family spending might additional stall the U.S. financial system, a dynamic that, paradoxically, is more likely to enhance client curiosity in electrical autos and different much less oil-dependent transport choices, regardless of the absence of strong federal coverage to advertise such applied sciences.

In distinction to the reactive, consumer-driven situation enjoying out within the U.S., China is responding to the disaster with clear-eyed strategic intent. Already main international markets in electrical car manufacturing, battery manufacturing, and renewable vitality deployment, China is now more likely to double down on its transition. Beijing has lengthy understood vitality safety as synonymous with nationwide safety, and with its oil imports critically uncovered to geopolitical disruptions, the federal government will aggressively speed up its electrification agenda. Coverage initiatives reminiscent of stringent EV quotas, large funding in battery factories, and widespread deployment of charging infrastructure all seem prescient as China seeks to additional insulate itself from the volatility now gripping oil markets.

All international locations are uncovered to rising volatility as demand drops, as main oil producing areas will grow to be uneconomic, main fields and refineries go off line, bulk transport transitions to growing older and fewer dependable ships, and main pipeline infrastructure turns into stranded property. The unlawful US strikes on Iran — unlawful underneath each US and worldwide regulation, however as at all times with the USA, by no means coming with penalties — are simply sharpening the attention of the volatility.

Sarcastically, the collapse of demand for oil globally will hasten the collapse of demand for oil, as worth spikes for quite a lot of causes improve and provide chains are disrupted by financial failure.

The European Union, equally positioned on the frontline of petroleum dependency, will take this geopolitical disaster as additional justification for its formidable electrification and renewable vitality applications. Europe’s accelerated pivot away from Russian fossil fuels in response to the 2022 invasion of Ukraine already set a robust precedent. That coverage momentum will now be amplified by fears of one other sustained worth spike pushed by Center Japanese battle.

The EU’s Match for 55 plan, its fast enlargement of charging infrastructure, and its steadfast implementation of carbon pricing mechanisms collectively place Europe to decisively cut back petroleum dependency. Policymakers throughout the continent clearly see electrification as the very best hedge in opposition to geopolitical volatility and as a cornerstone of broader decarbonization and vitality safety methods.

This doesn’t bode effectively for some facets of The Netherlands, the place I’m typing this previous to the beginning of per week of workshops with TenneT. At current, 4% of their GDP is tied up in vitality and petrochemicals, with the massive majority being for fossil fuels. That’s damaged down as 3% fossil fuels, 0.4% petrochemicals, 0.5% transmission and 0.05% biofuels. The nation imports crude and exports petroleum merchandise, largely gas for floor, water and air transportation. The nation refines the vast majority of transport and aviation fuels for Europe, some 70 million of 90 million tons of demand. Whereas longer haul transport and aviation will proceed to want liquid fuels, the volumes gained’t be practically as massive as current. (These numbers are approximate and from public sources over the previous few years, assembled rapidly to offer me a way of scale, so the place they’re clearly out, the error is with me.)

I count on the roughly 120 million metric tons of liquid fuels the nation exports, together with bunkering for cross-border aviation and ships, will plummet to twenty million tons. The present 2.5 million tons of biofuels will increase provide that. That gained’t fulfill European’s demand, however biofuels can be constructed from European waste biomass the place the biomass is, biomass gained’t be shipped to the refineries of the Netherlands in my view.

India, in the meantime, faces a very stark selection. Its petroleum demand has been rising quickly, inserting important pressure on the nation’s import-dependent vitality financial system. Observe that regardless of having 1.4 billion residents and being probably the most populous nation on the earth, having simply overtaken China, and having a GDP that’s fifth on the earth and buying energy parity that’s third on the earth, its consumption of petroleum fuels for transportation is the bottom among the many 4 main economies into consideration. It’s nonetheless consuming 1 / 4 of a billion tons of oil-based fuels a yr.

The present disaster underscores the acute dangers this dependency poses, seemingly prompting Indian authorities to grab the second to speed up their electrification efforts. With formidable targets for electrical car adoption, large-scale renewables deployment, and incentives aimed toward constructing home battery manufacturing capability, India is signaling a strategic pivot. Though nonetheless at an earlier stage of transition in comparison with China or Europe, India’s momentum will visibly intensify in response to this newest geopolitical shock, underscoring the significance of safe, domestically-controlled vitality infrastructure.

Whereas the U.S. market response is dominated by short-term client ache reasonably than coordinated coverage, this disaster underscores an essential perception I introduced on the Redefining Vitality podcast earlier this yr. My prediction was that 2025 would mark a decline in U.S. oil manufacturing, pushed by components such because the monetary self-discipline imposed by buyers, maturing shale property, and restricted urge for food amongst drillers to ramp up manufacturing once more rapidly.

Many business observers incorrectly assume that worth spikes routinely set off substantial new shale funding and manufacturing. Nonetheless, at the moment’s unstable atmosphere and the profound monetary uncertainty of one other boom-bust cycle imply that this conventional response is now not seemingly. Producers realized harsh classes in the course of the shale boom-and-bust of the final decade. Traders are actually unwilling to bankroll new shale developments solely in response to short-term worth volatility. Consequently, even this newest dramatic improve in oil costs is unlikely to result in a significant resurgence in U.S. shale oil manufacturing.

Wanting forward, international liquid gas demand is about for important transformation. By mid-century, it’s clear that electrification will dominate floor transportation markets in China, Europe, and India, with the U.S. considerably slower however inevitably following swimsuit. Passenger automobiles, buses, and vans will grow to be predominantly electrical, pushed not simply by local weather insurance policies but in addition by nationwide vitality safety methods. Rail will all electrify, with India approaching 100% at the moment and the usA. lagging badly at current. Equally, short-haul aviation and coastal transport are on trajectories to embrace electrification applied sciences, together with battery-electric and hybrid options. The know-how required to impress shorter routes is quickly maturing and can be economically and strategically compelling by 2035.

Nonetheless, long-haul aviation and maritime transport face tougher vitality necessities and can largely transition to sustainable liquid biofuels. Superior biofuel applied sciences, significantly sustainable aviation fuels and marine biofuels, are more likely to grow to be dominant, supported by coverage frameworks that prioritize safe, low-carbon vitality sources. Biofuels equipped by home waste biomass feedstocks, notably sewage, animal dung, meals waste, are additionally a type of vitality safety, with residents and meals manufacturing for them being the supply. By 2050, conventional petroleum fuels are projected to occupy a considerably diminished share of the worldwide vitality panorama, largely relegated to area of interest purposes or areas slower of their transitions. That doesn’t apply to petrochemicals. The tip of the age of oil for vitality isn’t the top of the age of oil for helpful molecules, we simply gained’t be burning them, and the volumes can be vastly smaller.

This unfolding situation presents clear implications for policymakers and buyers. Governments in China, Europe, and India are quickly aligning their vitality insurance policies towards electrification and renewable energy already, and can speed up this, offering readability and certainty for buyers. Capital will more and more shift away from petroleum infrastructure, together with refining and pipelines, towards electrical energy grids, battery manufacturing, EV manufacturing, renewable energy technology, and biofuel processing amenities. Conversely, buyers uncovered closely to long-term petroleum infrastructure threat important asset stranding, significantly as main markets shrink their reliance on liquid fuels in response to repeated geopolitical shocks.

In essence, Trump’s bombing of Iran’s nuclear infrastructure has crystallized a elementary actuality: vitality programs depending on oil are inherently susceptible except a rustic is a petrostate. That’s true for all however one in every of these main financial blocs, the USA, with China main globally within the rush to grow to be electrostates. Nations recognizing this vulnerability are already transferring swiftly to scale back their publicity. This acceleration in electrification and renewable vitality funding will not be merely about responding to local weather change, it’s about making certain nationwide safety, financial stability, and resilience in opposition to future geopolitical upheavals.