The global energy market is showing signs of movement, but not yet stability. More oil and gas are once again finding their way out of the Gulf, yet the cost of moving energy around the world remains unusually high, while supply chains for diesel, jet fuel and other refined products remain under pressure.
The conflict involving Iran has turned what began as a major disruption to energy flows into a broader economic problem. Oil prices remain around or above the $100-a-barrel mark, shipping through the Strait of Hormuz is still far below normal levels, and governments are increasingly dealing with the consequences through fuel-tax changes, household support and efforts to secure alternative supplies.
The latest developments suggest that the immediate shortage of crude oil is not the only problem anymore. The bigger challenge is keeping energy supplies moving at predictable prices while the security situation remains uncertain.
Oil Flows Are Recovering, But the Market Is Still Tight
The Strait of Hormuz remains at the centre of the global energy crisis. Before the conflict, the waterway handled enormous volumes of crude oil, petroleum products and liquefied natural gas. Around 89% of crude oil and condensate passing through the strait was destined for Asian markets in the first half of 2025, according to U.S. Energy Information Administration estimates. China, India, Japan and South Korea were among the biggest destinations.
Some shipping activity has now returned. September saw the highest monthly number of LNG shipments through Hormuz since the conflict began, although the level remains far from normal. Data cited by Reuters showed 19 to 21 LNG cargoes passing through the waterway during the month, compared with much lower volumes earlier in the conflict.
But a partial recovery should not be confused with a return to normal conditions.
The International Energy Agency said in its September oil market report that Gulf refined-product and LPG exports remained nearly 60% below their February level. Gulf diesel and gasoil exports were particularly weak, with August volumes averaging only about a quarter of their pre-war level.
That distinction is important because consumers do not use crude oil directly. Crude has to be refined into products such as diesel, petrol, jet fuel and other fuels before it reaches businesses and households.
Why Oil Can Be Available While Prices Remain High
One of the most important features of the current crisis is the gap between physical supply and the cost of getting that supply to customers.
Brent crude has remained around the $100-a-barrel level. On October 1, Brent settled at about $102.31 a barrel after rising more than 4%, as concerns about renewed conflict and China’s restrictions on fuel-product exports added pressure to the market.
Even when additional Gulf exports become available, traders still have to account for shipping risks, insurance costs, longer routes and the possibility that supply could be interrupted again.
That risk premium can keep prices elevated even when the number of barrels reaching the market begins to improve.
The situation is particularly difficult for refined fuels. Diesel supplies have been affected not only by the Middle East conflict but also by disruptions to refining capacity elsewhere. The IEA has warned that losses in Gulf and Russian diesel exports have created a significant gap in global refined-product supplies.
For consumers, that can be more important than the headline crude-oil price.
Diesel Is Becoming a Major Economic Pressure Point
Diesel is closely tied to everyday economic activity. Trucks use it to transport food and manufactured goods. Farmers depend on it for tractors and harvesting machinery. Construction companies use diesel-powered equipment, while generators and industrial machinery also rely heavily on the fuel.
When diesel becomes more expensive, the impact can spread through the supply chain.
Transport companies face higher operating costs, farmers pay more to produce and move crops, and manufacturers can face increased logistics expenses. Eventually, some of those additional costs can reach consumers through higher prices for goods and services.
The current pressure is being intensified by a shortage of refined products. China has restricted fuel-product exports beyond Hong Kong and Macau, while Russia has extended restrictions affecting diesel exports. These decisions are adding another layer of pressure to an already tight global market.
Europe Faces a Fresh Cost-of-Living Challenge
Europe is particularly exposed because many countries depend heavily on imported energy.
Germany provides a clear example. Official data showed consumer-price inflation reached 2.9% in August, with energy prices becoming a major driver. Motor-fuel prices were 27.7% higher than a year earlier, while overall energy-product prices increased 10.5%.
By September, German inflation had climbed to 3.3%, its highest level since December 2023. Energy inflation accelerated sharply, with energy prices up 14.9% year-on-year, according to data reported at the end of September.
Germany has responded with a temporary reduction in fuel taxes, while other European governments are also considering measures aimed at limiting the impact on households and businesses.
The challenge is that governments can reduce taxes or provide subsidies, but these measures can also put additional pressure on public finances.
UK Households Face Higher Energy Costs
The United Kingdom is also entering a difficult period.
Ofgem’s energy price cap for a typical household paying by direct debit rose by 4% from October 1, 2026, taking the annualized figure to £1,723 for the October-to-December period. Ofgem said higher wholesale gas prices, linked to the continuing conflict in the Middle East, were a major reason for the increase.
At the same time, the UK faces a longer-term question about how quickly it can reduce its dependence on imported fossil fuels.
Renewable energy can reduce exposure to international oil and gas shocks, but expanding renewable generation also requires investment in electricity grids, storage, transmission infrastructure and household energy systems.
That means the transition cannot remove the short-term pressure overnight.
Asia Remains Highly Exposed to Middle East Energy Supplies
Asian economies are among the most directly affected by disruption around Hormuz.
The region receives the majority of the crude oil and condensate that normally passes through the waterway. India, China, Japan and South Korea are especially important markets in this trade.
For these economies, higher energy prices can affect transportation, manufacturing, electricity generation and household consumption.
China is also dealing with a separate challenge. Iranian oil had provided an important source of supply, but disruptions have reduced the availability of that crude. At the same time, China’s decision to limit fuel-product exports is tightening the international market further.
For major manufacturing economies, higher energy costs can eventually translate into higher production and transportation costs.
Nigeria Shows How Refining Capacity Can Change the Picture
Nigeria presents a different side of the energy story.
The country remains one of Africa’s major oil producers, but its expanding domestic refining capacity has changed its position in the refined-fuel market. The Dangote refinery has increasingly supplied both domestic and international markets and has helped Nigeria move toward becoming a net exporter of refined petroleum products.
Nigeria’s importance has become particularly visible in the jet-fuel market. Industry data reported in 2026 showed Nigerian jet-fuel exports to Europe reaching substantial levels, with the country’s refinery becoming one of the region’s major suppliers.
However, greater refining capacity does not automatically shield consumers from global prices. Crude costs, transportation expenses, currency movements and domestic distribution costs can still influence the final price paid at the pump.
Governments Are Trying Different Ways to Limit the Damage
Governments around the world are now using a mixture of policies to deal with the energy shock.
Some are cutting fuel taxes. Others are offering subsidies or direct financial support to households. Some countries are releasing strategic fuel stocks or looking for alternative suppliers.
India, for example, has adjusted export duties on diesel and aviation turbine fuel as international crude and refined-product markets have changed.
But such measures provide only temporary relief.
If global energy prices remain elevated for an extended period, governments eventually have to address the underlying issue: how to maintain affordable and reliable energy without remaining excessively exposed to a small number of vulnerable supply routes.
The Energy Crisis Could Accelerate the Shift Away From Fossil Fuels
The current crisis is also strengthening the argument for greater energy diversification.
Wind and solar power do not depend on oil shipments moving through Hormuz, while electric vehicles can reduce dependence on petrol and diesel for transport. Energy-efficiency measures can also reduce demand.
However, replacing fossil fuels on a global scale requires much more than building renewable power plants.
Countries need stronger electricity grids, large-scale storage, reliable transmission networks and more flexible power systems. Industrial sectors such as aviation, shipping and heavy manufacturing also remain difficult to decarbonise.
The transition therefore involves a long period in which traditional fuels and newer energy technologies will have to operate alongside each other.
What Happens Next?
The immediate direction of the global energy market will depend heavily on developments around Iran, the Strait of Hormuz and other major shipping routes.
There are some signs of improvement in Gulf energy flows, particularly in LNG shipments. But the latest data from the IEA shows that refined-product exports remain substantially below pre-conflict levels.
That means the crisis is no longer simply about whether oil exists. It is increasingly about whether energy can be transported, refined, insured and delivered at a predictable cost.
For households, businesses and governments, that distinction matters.
The Federal Reserve’s September decision to raise its benchmark interest-rate target by a quarter percentage point to 3.75%-4% also underlines the wider economic challenge created by persistent inflation pressures. The move was the first U.S. rate increase since 2023, but the Fed has also said economic uncertainty remains elevated, including because of geopolitical developments.
The coming months will therefore be closely watched. If energy flows continue to recover, some pressure could ease. If shipping disruptions return or refined-fuel supplies remain constrained, consumers and businesses could face another period of elevated costs.
For now, the global energy system is moving again but it is moving through a market where security risks, supply shortages and high prices remain tightly connected.
According to BBC NEWS