Are Global Markets Ready For A Sustained Energy Crisis?

The global energy market is once again under pressure, and the situation is turbulent. Rising oil prices, geopolitical instability in the Middle East and ongoing supply chain fragility are forcing businesses, governments and investors to confront a difficult question – that is, are we truly prepared for a prolonged energy shock?

While markets have weathered volatility before, many experts argue this moment feels different. This isn’t just a temporary spike – it could signal a deeper structural shift in how energy is priced, sourced and consumed. And for startups, corporates and policymakers alike, the stakes are high.

This Is A Crisis That Goes Beyond Price

One of the key themes emerging from experts is that this is not simply about rising costs – it’s about systemic disruption.

As Paulo Cardoso do Amaral, CIO and NATO Scientific Advisor, explains: “Global markets are not fully prepared for a prolonged energy crisis. What makes the current situation dangerous is that it is not just a price shock but a strategic disruption affecting inflation, logistics, supply chains, consumer demand and geopolitical stability.”

This idea is echoed across the board. Energy is deeply embedded in every part of the global economy, meaning shocks ripple far beyond fuel bills. From manufacturing and transport to food production and consumer goods, higher energy prices act as a multiplier – driving inflation and squeezing margins.

Tajbir Ahmed, Senior Lecturer at The University of Law Business School, points to the fragility of global supply routes: “Supply is more flexible than before, yet critical flows still hinge on chokepoints like the Strait of Hormuz, which typically carries about one fifth of global petroleum liquids consumption.”

If disruption in key regions continues, the knock-on effects could be significant: tighter monetary policy, reduced consumer spending and increased pressure on global trade.

Markets Are Adapting, But Not Quite Fast Enough

There’s a consensus that while markets are more aware of energy risks than in the past, they are still not structurally ready for a prolonged crisis.

John Haw, CEO of Fidelity Energy, highlights a critical shift already underway: “What we are seeing now is a shift from short-term volatility into something more sustained. This is not just a reaction to headlines, it is markets starting to price in the risk of longer-term disruption, particularly in gas.”

The issue is that energy systems, gas especially, are complex and slow to rebalance. When supply is disrupted, alternatives are limited, and the impact is felt quickly across industries.

JP Cerda, CEO and co-founder of Renewabl, puts it bluntly: “The honest answer to whether markets are prepared is no – not structurally. The underlying exposure has not changed fast enough.”

For businesses, this creates an uneven playing field. Some organisations are shielded by fixed contracts or hedging strategies, while others remain highly exposed to fluctuating market prices. As Haw notes, this leads to a “staggered effect across sectors, rather than a single moment of shock.”

In other words, the impact isn’t uniform, but it is widespread.

This Might Be A Turning Point for Energy Strategy

Despite the risks, many experts see this moment as a catalyst for long-term change.

Pablo Lloyd OBE suggests that rising fossil fuel costs may reflect a broader shift: “It is possible that higher fossil fuel costs are just catching up with the ‘externalities’ of their health and environmental impact. If that’s true, this short-term spike is part of a long term trend.”

This aligns with a growing view that the current crisis could accelerate the transition to alternative energy sources. Businesses are already being forced to rethink their strategies – from diversifying supply chains to investing in efficiency and renewables.

Benu Mukhopadhyay notes: “In the long run, this could accelerate the shift to renewables, driving innovation and sustainability.”

At the same time, resilience is becoming a competitive advantage. Companies that actively manage their exposure – through flexible sourcing, efficiency improvements and long-term contracts – are more likely to navigate prolonged volatility successfully.

As Amaral puts it, “Intelligence, preparation and agility is the answer.”

The reality is that global markets may not be fully prepared for a sustained energy crisis, but they are being forced to adapt quickly. Whether this moment becomes a prolonged disruption or a turning point depends on how businesses and governments respond now.

Our Experts

• Pablo Lloyd OBE: Adviser, Speaker and author of “The Financial Times Guide to Business Ethics”
• Paulo Cardoso do Amara: CIO and NATO Scientific Advisor
• Tajbir Ahmed: Senior Lecturer in Marketing and Management at The University of Law Business School
• Benu Mukhopadhyay: Senior Lecturer at The University of Law Business School
• John Haw: CEO of Fidelity Energy
• Javier Palomarez: Founder and CEO of the United States Hispanic Business Council (USHBC)
• JP Cerda: CEO and co-founder, Renewabl

Pablo Lloyd OBE, Adviser, Speaker and author of “The Financial Times Guide to Business Ethics”

“Spiking energy costs clearly create challenges for every consumer, business and economy – higher cost inflation and higher uncertainty hit consumers and start-ups hard.

“However, taking a long term view creates opportunities for entrepreneurs and consumers to think differently. Anyone working on solutions which address or adapt to the problems of climate change will appreciate a broader trend – less fossil fuel security, higher price uncertainty and, ultimately, a supply which will run out this century.

“Well before the current conflict, Norway’s vast sovereign fund had identified a 19% downside risk to its US equity investments as a result of long-term climate costs which had not been priced in by the market.

“It is possible that higher fossil fuel costs are just catching up with the ‘externalities’ of their health and environmental impact. If that’s true, this short-term spike is part of a long term trend.

“Reducing dependency on fossil fuels is the answer. The focus should be on moving to renewables and nuclear solutions, and increasing efficiency of energy usage in the meantime. This may be a signal for businesses and consumers to change their long-term strategies.2

Paulo Cardoso do Amaral, CIO and NATO Scientific Advisor

“Global markets are not fully prepared for a prolonged energy crisis. What makes the current situation dangerous is that it is not just a price shock but a strategic disruption affecting inflation, logistics, supply chains, consumer demand and geopolitical stability. Energy can be used as a tool of economic warfare, which increases vulnerability for countries and businesses that depend heavily on it. For companies, the right response is not to rely on forecasts but to prepare for multiple scenarios, monitor weak signals early and assess their exposure at three levels:

(1) direct energy costs
(2) operational dependencies
(3) broader market effects.

“The most effective preparation is practical, including supply flexibility, hedging, alternative sourcing, efficiency investments and stronger resilience planning. In the long run, firms that adapt fastest and treat resilience as a strategic capability will be better positioned,while capital is likely to move toward technologies and infrastructures that reduce exposure to volatile energy markets. Intelligence, preparation and agility is the answer. ”

Tajbir Ahmed, Senior Lecturer in Marketing and Management at The University of Law Business School

“Global markets are better prepared than in the 1970s, but not “ready” for a sustained energy crisis. Supply is more flexible than before, yet critical flows still hinge on chokepoints like the Strait of Hormuz, which typically carries about one fifth of global petroleum liquids consumption. If disruption persists, the shock will show up as higher input costs, renewed inflation, and tighter monetary policy pressuring valuations and trade.

“For businesses, the playbook must centre on resilience: quantify exposure (energy, freight, key suppliers); diversify supply and contracting (blend fixed, indexed, and hedged positions; consider corporate PPAs); invest in efficiency, electrification, and demand response; and stress-test cash flow and pricing, with clear customer communication. Households can mirror this by cutting demand, shifting usage to cheaper periods, and prioritising insulation and efficient appliances. Governments can help by accelerating efficiency and clean power, cushioning households without blunting price signals. Firms that treat energy as a strategic risk will outperform.”

Benu Mukhopadhyay, Senior Lecturer at The University of Law Business School

“The Middle East conflict is driving crude oil prices up, raising concerns about a prolonged energy crisis. With echoes of past crises, global markets must act swiftly. Businesses should diversify energy sources, boost efficiency, and hedge against price volatility. Governments can support with subsidies or strategic reserves.

“In the long run, this could accelerate the shift to renewables, driving innovation and sustainability. Markets must adapt quickly prioritising resilience and flexibility will be key. To achieve this, markets can diversify energy sources, improve efficiency, invest in innovation, and build strategic reserves. By taking proactive steps, businesses and governments can reduce vulnerability to energy shocks and uncover opportunities in the transition. ”

John Haw, CEO of Fidelity Energy

“Markets are more aware of energy shocks than they were in 2022, but they are not structurally prepared for a prolonged one.

“What we are seeing now is a shift from short-term volatility into something more sustained. This is not just a reaction to headlines, it is markets starting to price in the risk of longer-term disruption, particularly in gas.

“The challenge is that gas markets are harder to rebalance. When supply is disrupted, there are fewer immediate alternatives, and that feeds through into pricing and business costs much more quickly.

“We are already seeing businesses take a more active view on their exposure. That means reviewing contract positions, looking at renewal timing, and understanding how much of their energy is still exposed to market pricing.

“The impact will not land evenly. Some organisations will be protected in the short term, while others will feel cost increases much more quickly. That creates a staggered effect across sectors, rather than a single moment of shock.”

“If disruption is short-lived, markets can absorb it. If it continues, it becomes a structural cost issue, and that is when it starts to affect investment decisions, hiring and pricing more widely.

“Over the longer term, that would mean a period of higher and more volatile energy prices becoming the norm, rather than the exception. Markets will adjust, but not quickly, and that adjustment comes with cost.

“For businesses, the priority is not to try and predict the market, but to understand their exposure and build flexibility into how they buy energy. Those that know where they are exposed and act early tend to manage these periods far more effectively than those reacting late.”

Javier Palomarez, Founder and CEO of the United States Hispanic Business Council (USHBC)

“While the United States does not import much directly through the Strait of Hormuz, countries like China heavily rely on it for oil, LNG and more. However, energy is a global market. A nation as large as China will need that oil from elsewhere regardless of operations in the Strait, adding upward pressure to the market across the globe.

“This means a few things for small businesses. First, domestic energy prices will begin acting like an invisible tax. Over half of the oil in America is actually used in the production and manufacturing of goods like fertilizer, pharmaceuticals, rubber, plastic, cosmetics and more. As oil prices continue to rise, it directly translates into high production, manufacturing and distribution costs. Second, imports from other countries will become extremely expensive. With the closure of a critical shipping lane, skyrocketing insurance costs for barges, and foreign countries facing their own rising energy costs, it’s a perfect storm of high-cost variables.”

JP Cerda, CEO and co-founder, Renewabl

“Every major energy crisis has the same root cause: dependence on fuel we do not produce or control. We import the commodity and we import the price shock that comes with it.

“The honest answer to whether markets are prepared is no – not structurally. The underlying exposure has not changed fast enough.

“We have never been good at forecasting energy prices. There are too many variables: wars, weather, policy decisions. What companies can control is the structure of their procurement. Long-term renewable contracts give price visibility years ahead – that does not insulate you overnight, but it separates your costs from something you cannot control.

“For the grid, these crises keep happening because progress gets measured in annual averages. This hides the hours when the system still runs on imported gas, and where we actually need more storage, flexibility, or a different technology mix. Until that changes, we are adding capacity without fixing the exposure.”