Beyond Hormuz: Building a resilient energy future |
THE recent tensions around the Strait of Hormuz have once again exposed a fundamental vulnerability in the global energy system: an overwhelming dependence on a narrow maritime corridor through which nearly one-fifth of the world’s oil and gas supplies transit.
Any disruption—whether real or anticipated—triggers immediate shocks across international markets. Yet, beyond the headlines and price spikes, the deeper issue is structural. The Hormuz crisis is not merely a geopolitical flashpoint; it is a stress test of the world’s energy architecture. For decades, global energy flows have been optimized for efficiency rather than resilience. Oil-rich states in the Gulf, particularly those bordering Iran and its neighbors, have served as the backbone of supply, while major importers across Asia and Europe have built their economies around uninterrupted access to these resources. The result is a highly interconnected but fragile system, where a single chokepoint can reverberate across continents.
When tensions escalate in and around Hormuz, the immediate consequence is a surge in oil prices. Markets react not only to actual supply disruptions but also to perceived risks. Insurance premiums for tankers rise, shipping routes become uncertain and speculative trading amplifies volatility. These dynamics feed directly into global inflation, increasing the cost of transportation, manufacturing and food production. For economies already grappling with post-pandemic recovery and geopolitical fragmentation, such shocks can be destabilizing. However, the implications are far more severe for energy-importing developing countries like Pakistan. With a heavy reliance on imported oil and liquefied natural gas (LNG), Pakistan’s economic stability is tightly coupled with global energy prices. A sustained disruption in Hormuz can rapidly widen the current account deficit, weaken the national currency and intensify inflationary pressures. In practical terms, this translates into higher fuel prices, increased electricity tariffs and a rising cost of living for ordinary citizens.
The power sector, already burdened by structural inefficiencies, becomes particularly vulnerable. Pakistan’s dependence on imported fuels for thermal power generation exposes it to external price shocks, while circular debt continues to constrain investment and operational efficiency. In such a scenario, the government faces an unenviable choice: absorb the shock through subsidies—further straining fiscal resources—or pass the burden onto consumers, risking social and political backlash. Yet, while the risks are immediate and tangible, the Hormuz crisis also presents an opportunity—one that policymakers in Pakistan and other similarly placed economies can no longer afford to ignore. The lesson is clear: energy security cannot be achieved through dependence on a single supply route or a narrow set of energy sources. Resilience must be built through diversification, localization and efficiency.
One of the most immediate and pragmatic avenues is regional energy connectivity. Projects such as the Iran–Pakistan Gas Pipeline and the TAPI Pipeline, despite facing political and logistical challenges, offer a pathway to reduce reliance on maritime energy imports. Pipeline-based supply chains are not immune to disruption, but they provide a level of stability and cost predictability that volatile LNG markets often lack. At the domestic level, Pakistan must accelerate the utilization of its indigenous resources. The Thar Coalfield represents a significant, albeit controversial, asset. While environmental concerns cannot be dismissed, the economic reality is that locally sourced coal can provide a more stable and cost-effective alternative to imported fuels in the short to medium term. The key lies in adopting cleaner coal technologies and integrating them within a broader transition strategy. Equally critical is the expansion of renewable energy, particularly solar power. Pakistan is geographically well-positioned, with high solar irradiance across much of the country. Over the past decade, the cost of solar photovoltaic technology has declined dramatically, making it one of the most competitive sources of electricity globally. When coupled with advancements in battery storage, solar energy can play a transformative role in reducing dependence on imported fuels and enhancing grid resilience.
Hydropower also remains an underutilized pillar of Pakistan’s energy mix. Large-scale projects, though capital-intensive and time-consuming, offer long-term benefits in the form of low-cost and low-carbon electricity. More importantly, they contribute to energy sovereignty by leveraging domestic natural resources. However, the most overlooked—and arguably most cost-effective—solution lies in energy efficiency. Reducing transmission losses, modernizing grid infrastructure and promoting energy-efficient appliances and industrial practices can significantly lower overall demand. In many cases, the cheapest unit of energy is the one that is not consumed. For a country facing chronic supply constraints, demand-side management should be treated as a strategic priority rather than a peripheral concern. Ultimately, the Hormuz crisis underscores a broader reality: the era of cheap and secure energy flows is over. The global energy system is entering a phase of heightened uncertainty, shaped by geopolitical rivalries, climate imperatives and technological transitions. For Pakistan, this is both a challenge and a moment of reckoning.
The path forward requires a shift from reactive policymaking to strategic foresight. Energy planning must move beyond short-term fixes and crisis management towards a coherent framework that prioritizes resilience, diversification and sustainability. This includes not only investing in infrastructure and technology but also strengthening institutional capacity and regulatory coherence. Beyond Hormuz is not merely a geographical proposition; it is a strategic imperative. The question is not whether another disruption will occur, but when. The real test lies in whether Pakistan—and the world at large—chooses to remain vulnerable to external shocks or takes decisive steps to build a more secure and resilient energy future.
—The writer is Director, Institute of Physics, Khwaja Fareed University of Engineering and Information Technology, Rahim Yar Khan, Pakistan.