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Global oil and gas supply remains strong, but energy security risks persist
Over two-thirds of seaborne energy trade depends on a few key chokepoints
Strait of Hormuz disruption highlights vulnerability of global energy flows
Asian economies, including India, face high exposure to import disruptions
Report calls for electrification and clean energy to reduce long-term risks
Even though the world has plenty of oil and gas, energy security remains fragile. Countries that depend on imports are still vulnerable to disruptions at key shipping routes, according to a new report by think tank Third Generation Environmentalism (E3G). The analysis highlighted the urgent need to shift towards cleaner and more resilient energy systems.
This comes against the backdrop of Israel and the United States (US) launching an attack on Iran in the wee hours of February 28, which led to the closure of the Strait of Hormuz, a critical checkpoint that carries roughly one-fifth of global oil and liquefied natural gas (LNG) flows.
In its report Beyond Securing Supply, E3G finds that more than two-thirds of seaborne oil and gas demand relies on a handful of transit routes, leaving global energy systems vulnerable to price shocks, shipping disruptions and supply constraints even in well-supplied markets, highlighting the urgency of reducing dependence on imported fossil fuels.
The report also outlines a five-step approach to help countries reduce risk and improve resilience. It assesses major importers such as the European Union, China, Japan, South Korea, India, Pakistan, Bangladesh, Singapore and Thailand. The conclusion is clear: no country is fully protected, even though levels of vulnerability vary.
According to the report, the most reliable long-term solution is to reduce reliance on oil and LNG. This can be done through electrification, energy efficiency, stronger grids, storage and domestic clean energy.
Short-term measures can help manage immediate disruptions, but they do not fix the underlying problem. Only reducing fossil fuel demand and expanding clean energy can offer lasting protection.
Oil prices have surged sharply due to the conflict. Prices rose from about $70 per barrel to around $122 in the past month. On March 31, Brent crude was trading near $113 per barrel — a nearly 60 per cent increase since late February.
Fuel prices in the United States have also risen, while natural gas markets remain volatile due to infrastructure damage. Prices eased slightly after reports of possible de-escalation by the Trump administration, but remain high..
The findings come against a backdrop of expanding global supply. New LNG export capacity, rising oil production in the Americas, and slowing demand growth in advanced economies have created expectations of a relatively well-supplied market this decade.
The report says energy insecurity is not just about how much fuel is available, but how it is transported. A few key routes — such as the Strait of Hormuz and the Strait of Malacca — carry a large share of global oil and LNG.
The Strait of Hormuz alone handles 26 per cent of oil shipped by sea and 22 per cent of LNG. This heavy dependence means even small disruptions can quickly affect global markets.
Richard Smith, senior policy adviser at E3G, said the current situation is not a one-off event. “It's an inherent and unavoidable part of the global oil and gas system. Even though we were just in an era of low price and oversupply, globally integrated fossil fuel markets leave all oil and gas consumers bracing for an inflation shock,” he said.
He added that while renewables also face some risks, they offer a more stable solution over time. “Renewables aren’t without risk. There are also solar panels stuck in Hormuz right now. But for every solar panel that makes it through, that’s secure energy every day for a generation. Renewables and energy efficiency are the only realistic way to escape this crisis loop,” he said.
Recent events have exposed these vulnerabilities. The Russia-Ukraine conflict in 2022 showed Europe’s dependence on gas pipelines. More recently, tensions in the Red Sea and Strait of Hormuz have highlighted risks to shipping routes.
Oil markets are especially sensitive because price changes affect all countries globally. LNG markets face both price spikes and delivery challenges due to limited shipping and regasification infrastructure, leading to regional shortages during crises.
Compounding these risks are so-called “paper chokepoints”, including insurance withdrawal, sanctions and contractual rigidities, that can make rerouting shipments difficult even when alternative routes exist. Climate change is further tightening the system by reducing capacity in key corridors such as the Panama Canal during droughts.
Asian countries are among the most exposed because they rely heavily on imported fossil fuels. A large share of energy passing through the Strait of Hormuz is headed to Asia, particularly India, China, Japan and South Korea.
India is specially vulnerable. Around 45 per cent of its oil imports and 53 per cent of its LNG imports pass through the Strait of Hormuz. This exposes the country to both supply disruptions and price shocks that feed into inflation and trade balances.
Other South Asian countries such as Pakistan and Bangladesh face even higher risks due to limited alternatives and weaker financial capacity.
Many Asian supply routes also pass through multiple chokepoints, like the Strait of Malacca, increasing the risk of disruption. If one route is blocked, shipments must be diverted, raising transit times, freight costs and pressure on global shipping capacity.
The consequences of prolonged disruptions will be felt unevenly across Asia, said Madhura Joshi, programme lead, global clean power diplomacy, E3G. “For India, sustained high oil prices translate directly into widening current account deficits, currency pressure, and fiscal stress that could constrain both growth and public spending,” she said. Japan and South Korea, among the world's most LNG-dependent economies, face acute supply vulnerability with limited ability to absorb prolonged market tightness, she pointed out.
She added that clean energy is the most reliable long-term solution. “Energy security for these economies cannot rest on access to the same fragile chokepoints; accelerating electrification and domestic clean energy is the most durable path to genuine resilience,” she said.
The report outlines a mix of immediate and long-term measures to manage these risks. In the short term, governments can stabilise markets through coordinated releases of strategic reserves, emergency demand reduction and improved system flexibility to cushion supply shocks.
However, it cautions that measures such as diversifying fossil fuel suppliers or expanding storage can only provide temporary relief, as they do not remove exposure to global price volatility or chokepoint disruptions.
The most durable solution, the analysis argues, lies in reducing structural dependence on imported fossil fuels. Scaling up clean energy, electrification, grid infrastructure and energy storage can help countries insulate their economies from external shocks while lowering reliance on vulnerable maritime routes.
Strengthening system resilience through better infrastructure protection, diversified supply chains for clean technologies, and greater coordination among importing countries is also identified as critical to managing future disruptions.
Without such structural shifts, the report warns, global energy systems will remain exposed to recurring shocks, regardless of how abundant fossil fuel supplies appear.