Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
2026 will be known as a year of energy security and energy resilience, said a panel of experts who spoke at a webinar organised by ADIPEC as Brent crude traded around $104 per barrel on Monday following the Strait of Hormuz crisis.
The resilience of the global energy system, supply strategies and energy security will remain in sharp focus as the conflict in the Middle East pushes global energy prices higher and exposes vulnerabilities in key energy trade routes, the panel said during the discussion.
The experts included Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie; Joseph McMonigle, President and CEO of the Global Center for Energy Analysis and former Secretary General of the International Energy Forum; and Gaurav Sharma, energy market analyst and columnist.
Simon Flowers said the ongoing disruptions to energy flows highlight the fragile nature of global supply chains.
“This is a global issue with both substantial volumes, about 15% each of gas and oil volumes disrupted. The key to the supply disruption that we are seeing is really how long the disruption lasts,” Flowers said.
He added that the outcome remains highly uncertain and depends largely on whether shipping routes through the Strait of Hormuz can reopen quickly. “If somehow the Strait of Hormuz reopens quickly, we might get oil and then later gas beginning to flow,” he said, noting that market prices are reacting swiftly to changing expectations even though restoring actual physical supply may take longer.
The panel noted that markets have experienced extraordinary volatility since the crisis began. Within a 24-hour period Brent crude surged toward $120 a barrel before falling below $80 amid conflicting reports about maritime security measures. This $40 price swing illustrates a market driven largely by sentiment rather than a physical shortage of crude, the experts said.
Joseph McMonigle highlighted the strategic importance of the Strait of Hormuz, noting that roughly 20% of the world’s crude supply passes through the narrow waterway.
“The Strait of Hormuz is 20% of the world’s crude supply and so that is a significant issue that needs to be addressed,” he said, adding that the current situation is likely to make 2026 a defining year for energy security.
“I think 2026 is going to go down as the year of energy security,” McMonigle said, pointing to recent measures by energy-producing countries to strengthen resilience in the system.
He cited examples such as Saudi Arabia’s East-West pipeline, which is now allowing up to 7 million barrels per day of crude to bypass the Strait of Hormuz, and the UAE’s Habshan-Fujairah pipeline, which provides an alternative export route to the Gulf of Oman. These types of infrastructure investments, he said, are likely to become more common as countries seek to strengthen the resilience of both oil and LNG supply systems.
The panel also pointed to the unprecedented scale of emergency responses aimed at stabilising global energy markets. The International Energy Agency and G7 countries have coordinated what they described as the largest Strategic Petroleum Reserve release in history, amounting to about 400 million barrels—double the volume released during the early stages of the Russia-Ukraine conflict.
In addition, China’s massive crude oil reserves—estimated at between one billion and 1.4 billion barrels—could act as a buffer that helps reduce pressure on global demand during periods of supply disruption.
Gaurav Sharma said the crisis highlights stark differences in how various regions can respond to supply disruptions.
While Europe and North America may be able to switch to alternative suppliers such as West Africa or the North Sea, Asian economies face greater challenges due to their heavy dependence on Gulf crude.
“For the Big Four – China, India, Japan, and South Korea – replacing Gulf crude means doubling shipping times from three weeks to nearly eight weeks,” Sharma said, adding that some Asian economies have fewer options for diversifying suppliers and therefore face greater vulnerability.
Sharma also warned that market nervousness could intensify if the disruption continues beyond the short term. “The trading community is hoping that all will be done and dusted in four weeks… but once the four-week period has lapsed, you will see the nervousness in the market amplify,” he said.
Another major challenge is the time required to restore supply chains once disruptions occur. Even if the Strait of Hormuz were reopened immediately, it could take two to three months for the global energy system to return to normal operations.
Shut-in wells would require remedial work, refineries would need recalibration and shipping backlogs would have to be cleared. Damage to LNG infrastructure, including key terminals in the Gulf region, could also extend disruptions to natural gas markets for a longer period than crude oil.
The experts agreed that the crisis has exposed structural vulnerabilities in global energy infrastructure and underscored the need for increased investment in resilient supply chains, alternative export routes and strategic reserves.
