TL;DR
The International Energy Agency’s latest electricity outlook suggests low‑emissions sources (renewables plus nuclear) will generate roughly half of global electricity this year, up from under 40% in 2023. These sources will also cover demand growth until 2030.
In contrast, the war against Iran has pushed oil prices up and driven spikes in European gas prices within days. Flows through the Strait of Hormuz and key LNG exporters remain under threat.
For commercial decision‑makers, the message is that short‑term fossil price shocks are colliding with a long‑term structural shift towards electrification and low‑emissions power, accelerating some investment decisions and stranding others.
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THE CHARTS
Slow and steady – low-emissions power increases while oil prices are volatile
This graph from the International Energy Agency shows that coal is about to become less important for power generation while wind and solar are forecast to gain a much higher share globally.
This graph (available here), shows the price spike for Brent crude oil immediately after the US and Israel started their attacks against Iran on 28 February 2026.
What connects these trends?
On the surface, these look like two different worlds. One is all about slow‑moving infrastructure and long‑term climate targets. The other one involves tankers, attacks, and widely-reported price movements.
For many companies, however, they are part of the same story.
Electrification as an exit strategy from fossil fuel volatility: The International Energy Agency (IEA) projects that additional electricity demand is effectively de‑linked from burning even more fossil fuel. Renewables and nuclear cover virtually all net growth.
Oil shocks highlight the value of decoupling: The Iran war underlines how quickly oil and gas prices can jump when supply routes are threatened. Such volatility impacts everything – from freight to fertilizers to consumers.
Same decade, conflicting signals: In the short term, high fossil prices can make some low‑carbon projects look more attractive (e.g. electric heat pumps vs. gas boilers, electric vs. diesel cars). At the same time, they can also dampen demand or trigger policy back‑tracking if policy-makers prioritise immediate relief over structural change.
For company executives and investors, the question is not “which story is true?” Both are.
The question is: How much do you allow short‑term price shocks to derail a long‑term transition? After all, that transition is now baked into power‑sector investment plans.
Who gains, who lags behind?
The collision of these trends creates a complex landscape.
Oil and gas producers and traders
In the near term, they benefit from higher prices and volatility. Trading desks and producers exposed to spot markets are enjoying windfall margins.
In the longer term, the IEA’s electricity outlook suggests that incremental energy demand growth is shifting towards electrons, not molecules. This development makes demand growth for oil in particular questionable.
Power‑sector incumbents and renewable developers
Power producers engaged in wind, solar, hydro and nuclear are aligned with the structural rise of low‑emissions generation capacities.
Operators of flexible assets such as storage or gas turbines are likely to profit from higher price volatility and rising shares of variable renewables. However, this will also depend on regulators rewarding such flexibility.
Energy‑intensive and transport‑heavy sectors
In the short run, they are exposed to cost spikes from oil and gas, impacting margins and pricing decisions.
In the medium term, companies which can electrify processes or logistics (e.g. electric furnaces, EV fleets) will insulate themselves from fossil shocks.
Consumers and governments
Households face higher fuel and heating bills yet again. This leads to political pressure to “do something now”, often through tax cuts or subsidies.
Policy-makers have to balance immediate voter demands and the blunting of price signals which could help to encourage structural changes that may be beneficial – but only in the longer term.
Signals to watch
For business leaders and investors, this leads to a comprehensive monitoring list.
Policy reactions to high prices: Track whether governments respond to the Iran shock with short‑term fossil subsidies or with accelerated support for electrification and renewables (e.g. fast‑tracked permitting, grid investment, heat‑pump and EV incentives).
Corporate capex reallocation: Watch for energy‑intensive firms revising capex plans towards electrified processes and on‑site renewables, underlining energy security rather than emissions.
Grid and flexibility investment: According to the IEA, grid investment must rise by roughly 50% on average by 2030 to keep pace with low‑emissions supply and new loads like data centres. Monitor whether regulators actually allow that spending and cost recovery.
Oil‑demand forecasts post‑shock: Pay attention to whether major agencies and oil companies revise medium‑term oil‑demand projections down (assuming accelerated substitution and efficiency in response to higher prices).
These indicators will reveal whether this oil shock becomes just another spike, or a catalyst for an even faster pivot to the electricity‑centred system forecast by the IEA.
WHY IT MATTERS (AND WHEN)
Short term (0-2 years)
Margin risk and price‑setting: Companies exposed to oil and gas see immediate cost pressure and must decide how much to pass through. Hedging strategies and procurement agility become critical.
Trading and flexibility opportunities: Volatile fossil and power prices create opportunities for well‑positioned traders and flexible generators.
Medium term (2-5 years)
Electrification as competitiveness lever: Firms that use this window to electrify processes and logistics can stabilise energy costs and differentiate on both resilience and emissions.
Capex and location decisions: High and volatile fossil prices will increasingly be factored into where to site plants, data centres and logistics hubs, favouring locations with reliable low‑carbon power and supportive grid policies.
Longer term
Stranded‑asset and policy risk: If low‑emissions electricity continues to gain share as projected, long‑lived investments that assume cheap, stable fossil fuels risk becoming stranded or dependent on subsidies and regulatory protection.
Valuation and financing: Investors and lenders will increasingly differentiate between business models that are structurally exposed to oil and gas shocks and those that benefit from the rise of a predominantly low‑emissions power system.
Our takeaway
The oil shock is cyclical, the power‑system shift is structural. The current situation is not a detour from the electricity transition. It is one of the reasons that transition is happening in the first place.