Global Energy Crisis Intensifies as Middle East Conflict Disrupts Supply Chains
The ongoing military actions by the US and Israel in Iran have triggered severe disruptions in global energy markets, with profound implications for international trade and economic stability. Since the conflict began over two weeks ago, the Straits of Hormuz, a critical maritime chokepoint, has seen its daily oil traffic plummet by more than half. Normally handling 20 percent of global oil demand and 20 percent of liquefied natural gas (LNG) trade, the straits are now largely blocked, with Qatar declaring force majeure at its Ras Laffan plant, halting LNG flows entirely.
Strategic Reserves Offer Limited Relief Amid Supply Shortfalls
In response to the escalating crisis, the International Energy Agency (IEA) has authorised the release of 400 million barrels from strategic reserves to stabilise volatile markets. While this intervention may provide some temporary cushioning, it represents only about three weeks of foregone supply, leaving global energy systems in a fragile state. This situation starkly underscores the physical realities of energy security, which hinge on complex, integrated logistics chains that are vulnerable to geopolitical shocks.
UK's Heavy Dependence on Imported Energy Exposes Vulnerabilities
More than 70 percent of the UK's primary energy demand is currently met by oil and gas, with approximately 45 percent of that sourced from imports. These resources are indispensable, heating homes, powering businesses, fueling transportation, and serving as feedstocks for countless industrial processes and consumer products. The government's narrative, which emphasises reducing reliance on fossil fuels in light of the Middle East conflict, is viewed by critics as dangerously simplistic, ignoring the decadal timeline required for such a transition.
Punitive Policies Stifle Domestic Production and Investment
The UK's approach to energy policy has been characterised by an 'offshoring' mindset, marked by a punitive tax regime on domestic production, a de facto freeze on new field approvals, and a halt to exploration licensing. Consequently, no new North Sea field has been approved since Serica's Belinda field in May 2024, and 2025 saw zero exploration wells drilled for the first time since the 1970s. These measures actively discourage investment in homegrown resources, exacerbating dependence on imports.
Missed Opportunities and Contrasts with Norway's Strategy
The Secretary of State is currently sitting on approvals for new UK oil and gas fields that, if actioned promptly, could have reduced LNG import requirements by over one third. While new projects would not yield immediate results, delayed approvals hinder long-term security. In stark contrast, Norway has sanctioned 26 projects in the past four years, many aimed at exporting gas to the UK, highlighting a more proactive stance on energy independence.
Potential of UK Continental Shelf and Environmental Benefits
The UK Continental Shelf remains the second-largest oil and gas resource base in Western Europe, capable of meeting around half of domestic demand over the next 25 years. Increasing domestic production not only supports the economy and jobs but also offers environmental advantages. Imported LNG is three to four times more emissions-intensive than average UK-produced oil and gas, making homegrown resources a lower-carbon option during the energy transition.
Call for Policy Shift to Maximise Domestic Resources
Experts argue that developing domestic oil and gas is compatible with the energy transition and essential for national security. A pivot in policy to stimulate investment in the North Sea could protect the UK during crises and reduce reliance on riskier, carbon-intensive imports. Industry leaders, such as Serica Energy, stand ready to invest in projects that bolster energy needs, with many capable of delivering production and economic growth in the near term.
As the Chancellor noted, where things are made matters—a principle that holds true for energy as much as any other sector. The current global turmoil reinforces the urgent need for the UK to prioritise domestic production to safeguard its energy future.
