As the world grapples with the closure of the Strait of Hormuz and soaring oil prices, experts warn we could be facing a crisis worse than the 1970s oil shock. But this time, technology and shifting energy dynamics are creating a fundamentally different landscape – one where artificial intelligence and renewable energy adoption are accelerating in response to geopolitical turmoil.
The 1970s Revisited: A Different Kind of Crisis
The 1970s oil crisis was “fundamentally different” from today’s situation, according to economist Dr. Carol Nakhle. Back then, Arab oil producers deliberately placed an embargo on countries supporting Israel during the Yom Kippur war, leading to a near quadrupling of oil prices within months. This triggered fuel rationing, global economic turmoil, and recessions in both the US and UK from 1973 to 1975.
Today’s crisis stems from the US-Israeli war with Iran, which has effectively shut the Strait of Hormuz – a crucial waterway handling about 20% of the world’s oil and liquefied natural gas. Lars Jensen, a shipping expert and former director at Maersk, warns the impact could be “substantially larger” than the 1970s chaos. “We will face massive energy costs – not just while this crisis goes on but also for six to 12 months after it’s over,” he told the BBC.
Market Resilience vs. Developing World Vulnerability
While the volumetric disruptions are significant, Nakhle argues today’s market is more resilient. “It is more diversified, less oil-intensive, and better equipped with buffers and emergency response mechanisms,” she notes. The world has learned from past crises, with better economic understanding and more countries holding strategic oil reserves.
However, Joel Hancock of Natixis CIB highlights a critical distinction: the 1970s crisis targeted developed countries with resources to manage it, while today’s primarily affects developing nations lacking robust institutions. “Collateral damage to energy infrastructure was also not a factor in the 1970s crisis, as it is currently,” he adds.
AI and Renewables: The Acceleration Effect
Here’s where the story takes a modern twist. While oil prices swing wildly – Brent crude has fluctuated from $87 to $115 a barrel in recent weeks – renewable energy adoption is surging. Greg Jackson, CEO of Octopus Energy, reports a 50% increase in solar panel sales and 30% rise in heat pump sales in the UK since the Iran war began on February 28.
“We’ve seen a 50% rise in solar panel sales since the start of Iran war,” Jackson told the BBC. Enquiries about electric vehicles are up more than a third, and charger enquiries have increased by about a fifth. This acceleration in green technology adoption comes as households face potential energy bill increases of �332 from July, according to British Gas CEO Chris O’Shea.
The Geopolitical Rollercoaster
The market volatility reflects conflicting geopolitical signals. Oil prices dropped sharply when US President Donald Trump claimed negotiations with Iran were progressing, only to rebound when Tehran called these claims “fake news.” Brent crude fell 6.6% to $97.56 a barrel on one day, then rose 4% to $103.94 the next.
Asian stock markets have mirrored this uncertainty. Japan’s Nikkei 225 fell 3.4% and South Korea’s Kospi dropped almost 5% on one Monday, only to recover partially the next day. These markets are particularly vulnerable since they rely heavily on oil and gas from the Strait of Hormuz.
A Tipping Point for Energy Transition?
Jackson contrasts Europe’s cautious approach to green energy with China’s aggressive moves, noting that China aims to eliminate all petrol stations by 2040. “Europe was ‘torturing’ itself over discussions about moving too fast or slow on green energy,” he said, while “China, however, was just ‘getting on with it.'”
This crisis may accelerate what was already inevitable. As Fatih Birol, director of the International Energy Agency, warned: “This crisis as things stand is now two oil crises and one gas crash put all together.” But unlike the 1970s, we now have alternatives – and they’re gaining traction faster than ever.
The AI Dimension: Beyond Energy
Jackson also touched on artificial intelligence’s rapid advancement, noting “the ‘relentless pace’ in AI advancement could leave humans with very little that they are better at than machines.” While not directly related to the energy crisis, this observation highlights how multiple technological transformations are converging.
AI could play a crucial role in optimizing energy grids, predicting supply disruptions, and accelerating renewable technology development. As traditional energy markets face unprecedented volatility, the intersection of AI and clean energy represents one of the most promising paths forward.
The current crisis will only end “once the war de-escalates,” according to Hancock. But its legacy may be a world that moves faster toward energy independence through technology. The 1970s crisis changed global politics; this one might accelerate our technological future.