DNV study forecasts effect of Hormuz disruption on future energy supply

The disruption to the Strait of Hormuz has strengthened incentives for importing countries to diversify supply and reduce their exposure to oil and gas, according to the tenth edition of DNV’s ‘Energy Transition Outlook’.

DNV’s new forecast sees the Middle East supplying around 40% of global oil production in 2050, compared with 50% in last year’s outlook. Meanwhile, Energy-importing regions China, India and Europe have collectively shifted towards non-fossil energy more than three times as fast as the Middle East, North America and Russia.

An additional DNV sensitivity analysis examines the impact of the Middle East conflict continuing until 2030, with oil and gas prices remaining moderately elevated during that period. Under this scenario, global oil and gas demand would be 4–6% lower while the conflict persists. Demand would remain 2–5% below DNV’s main forecast for the remainder of the forecast period, indicating permanent demand destruction as consumers and governments accelerate the shift to alternative energy sources.

“Energy security is redrawing the map of the energy transition,” said Ditlev Engel, CEO - Energy Systems at DNV. “Importing regions are accelerating electrification, renewables and storage to reduce their exposure to the most insecure fossil-fuel markets. Exporters, meanwhile, are responding to today’s shortages by increasing investments and production. The result is a widening divide in the speed and direction of the transition.

“While the geopolitical landscape is becoming more complex, there should be no doubt that the energy transition is happening, and that it is already large in scale. However, we must continue to embrace and accelerate it, as everyone is starting to recognise that energy is now part of our critical infrastructure and must be prioritized accordingly”