Why Energy Security Is Now Driving Electrification, Not Climate

The Strait of Hormuz crisis was supposed to be the shock that broke global energy markets. It has not, and one number explains much of why: according to Rystad Energy, Russia’s share of Europe’s gas imports fell from roughly 36% in 2021 to about 7.5% by 2025, leaving energy security far less hostage to a single supplier and opening the door to faster electrification.

For decades, analysts treated a Russian supply cut and a Gulf war as worst-case scenarios. Both have now happened. Rystad’s Global Energy Scenarios 2026 report finds that the Russia-Ukraine war and the US-Israel-Iran war each unfolded differently from what many had expected.

That gap between fear and outcome matters for your portfolio. If you understand why the system held, you can see where the pressure has shifted instead of disappearing.

Here is what the evidence points to: which supply chains, commodities and policy choices now carry the most weight for mining and energy investors, and where the hidden costs of resilience are building.

Why did Europe’s gas pivot cushion the Hormuz shock?

Go back to 2021. Europe relied on Russian pipelines for more than a third of its imported gas, while American liquefied natural gas (LNG) was a minor supplier. LNG is natural gas cooled into liquid form so it can be shipped by tanker rather than piped.

Four years later, the two suppliers had largely traded places.

Source: Rystad Energy, Global Energy Scenarios 2026

The shift followed Russia’s 2022 invasion of Ukraine, and it was painful at the time. Rystad’s analysis, which Jon Ødegård Hansen, Senior Vice President and Head of Energy Systems, has outlined, links that earlier restructuring directly to the system’s ability to absorb the Hormuz disruption. The resilience was not luck, and it does not suggest the crisis was overstated.

EU gas diversification was not a single decision but a sequence of supplier, terminal and contract choices, and that sequence is why the continent could absorb a Gulf disruption that would have been far more damaging in 2021.

It was the dividend of costs already paid.

There is a catch, though. Swapping Russian pipelines for seaborne LNG reduced Europe’s reliance on one supplier, but it plugged the continent into a global cargo market where other buyers compete for the same supply.

What this tells you is that diversification, once completed, is what cushions the next shock. When you assess regional exposure, the more useful question is which markets have already done their restructuring and which are still facing it.

How the 2020s toolbox differs from the 1970s response

The oil shocks of the 1970s hit an energy system with few quick escape routes. Governments could respond in only a handful of fast ways: drawing down oil stocks, switching fuels, promoting public transport and encouraging behaviour change.

Everything else took years. New oil and gas fields, nuclear plants, pipelines, tankers and fleet replacement all required long build times and heavy capital before they delivered relief.

Rystad counts 25 technology and policy options available today, covering both new supply and reduced demand. The 1970s used 12 of them. The 2020s added 13, and Rystad estimates 11 of those can be deployed within months or even days.

Supply-side additions

On the supply side, the new tools include shale oil and gas, a deeper global LNG market, wind, large-scale solar and battery storage.

Demand-side additions

On the demand side, they include heat pumps, electric vehicles (EVs), smart building controls and flexible industrial processes. Solar panels, batteries, heat pumps and EVs share one trait: they are standardised products, mass produced and installed one unit at a time, with no wait for a megaproject.

Line those tools up and a pattern appears. Most of them either generate electricity or run on it.

Electricity as the common thread Jarand Rystad, Founder and Executive Chairman of Rystad Energy, argues that most alternatives to imported oil and gas produce power, which then displaces fossil fuels in transport, heating and industry. He notes the same logic applies to AI data centres.

For you as an investor, that changes how an energy shock travels through markets. A faster toolbox means a supply crisis can accelerate demand for electrification hardware and the minerals inside it, such as lithium, copper and other battery and grid inputs, rather than simply lifting oil and gas prices.

What did resilience cost? LNG bidding wars and the diesel squeeze

None of this means the system escaped unharmed. Resilience has a price, and Rystad’s report shows where it is being paid.

Three pressure points stand out:

• LNG competition: Both Europe and Asia are chasing the same cargoes, which could leave European winter stocks thin and Asian supply short.
• Russian diesel export ban: After Ukrainian strikes hit Russian refineries, Moscow barred diesel exports, and the timing coincided with the Hormuz disruption cutting Middle East supply.
• Depleted inventories and record margins: Diesel stocks sit about 14% below their five-year average, and US refining margins on diesel have hit record territory.

The diesel figure needs a definition. A crack spread is the margin a refiner earns by turning crude oil into a product such as diesel, measured as the product’s price minus the cost of crude.

Key statistic The US diesel crack spread has climbed above a record US$100 per barrel, according to Rystad Energy.

A margin that wide signals a market short of refined fuel, not short of crude. Policy has added complications too. US President Donald Trump‘s decision to lift sanctions on Russian diesel has been described as controversial, carrying geopolitical consequences of its own.

Record diesel prices have arrived even as crude has softened, which confirms that the squeeze sits in refined products rather than in the oil barrel itself.

The read you should take from this is that diesel and LNG are absorbing the shock. Refining margins, freight-dependent sectors and winter gas exposure carry risks the headline resilience story hides. If you hold mining stocks, remember that diesel is a direct operating cost for haul fleets and remote power.

Is energy security now driving electrification, and who benefits most?

Rystad’s central conclusion is that energy security, rather than climate policy alone, has become the main driver of the transition. It favours electrification powered by domestic energy sources.

Short-term relief versus long-term policy

Governments have mostly reached for the quick fix first. Rystad’s tally since February 2026:

• 97 countries have cut fuel taxes, paid subsidies or capped prices.
• 26 countries have adopted electrification policies.
• 22 of those 26 are in Europe and Asia.

That gap tells you the policy shift is real but narrow. Most governments are cushioning consumers today rather than rebuilding their energy systems for tomorrow.

The scale of potential oil demand destruction from electrification is large; the IEA’s high-electrification scenario points to roughly 18 million barrels per day of demand disappearing by 2035.

The coal caveat

The report recommends electrifying with whatever domestic sources a country has: renewables and nuclear where available, and coal where reserves exist. New coal capacity is barely being added, yet extended plant lifetimes and postponed closures keep emissions running for longer, notably in Italy through to 2038 and at Thailand’s Mae Moh plant.

China’s concentrated advantage

The quiet winner in all of this is China. Importers looking to replace Gulf oil and gas are buying Chinese batteries, minerals and vehicles in large volumes, and Rystad estimates China’s battery EV exports will rise from 3.83 million units in 2025 to 6.84 million in 2026.

Rystad warns that several of these supply chains are more concentrated than the fossil fuel system they are replacing. It compares Chinese battery, solar and vehicle makers to Japanese automakers after the 1970s oil shocks, when a crisis handed a ready manufacturer a lasting foothold in global markets.

Here is the uncomfortable part. The route away from Gulf dependence runs largely through Chinese factories and refineries. For mining and energy investors, that shifts exposure from oil chokepoints to mineral and manufacturing chokepoints, and it raises the strategic weight of non-Chinese processing capacity and domestic generation.

What the resilience story changes, and what it leaves exposed

Diversified gas sourcing and a faster, electricity-centred toolbox explain why markets held through the Hormuz crisis. LNG competition, tight diesel and China-concentrated supply chains show where the risk has moved.

For your decisions, four indicators deserve attention: diesel inventories against their five-year average, Europe-Asia LNG competition heading into winter, whether electrification policies spread beyond the current 26 countries, and how concentrated mineral processing remains.

This analysis rests on Rystad Energy’s scenarios, and independent confirmation of some trends remains limited. These statements are speculative and subject to change based on market developments.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

The next shock may test minerals and manufacturing more than oil, and the investors watching those chokepoints now will see it first.