Chokepoints create recurring energy security risks for fossil fuel importers: Report

More supply of oil and LNG does not necessarily translate into greater energy security due to the persistent and unavoidable risk of chokepoints, according to a new analysis from independent energy and climate politics think tank E3G.

The report assesses vulnerability across major oil and LNG importers by looking at both their exposure to chokepoints and their ability to respond to disruptions.

It finds that import-dependent economies in Europe and Asia are particularly at risk. “Disruptions to trade through chokepoints can cascade quickly through global systems, as illustrated by the recent escalation around the Strait of Hormuz,” E3G statement said.

Beyond the physical supply risk that chokepoints create, there are also a series of “paper chokepoints” that can tighten markets even without a full blockage via shipping constraints, insurance withdrawal, rerouting delays and risk premiums. Because oil markets, and increasingly the LNG markets, are globally interconnected, disruption in one location can have rapid knock-on effects elsewhere, driving price volatility and competition for available cargoes.

High exposure to chokepoints combined with limited short-term demand flexibility therefore creates systemic macroeconomic risk even in a period of apparent market abundance – and even for countries who are not physically dependent on chokepoints for their fossil fuel supply.

“What we're seeing in Hormuz isn't a freak, one-off event. It's an inherent and unavoidable part of the global oil and gas system. Even though we were just in an era of low price and oversupply, globally integrated fossil fuel markets leave all oil and gas consumers bracing for an inflation shock. Renewables aren’t without risk – there are also solar panels stuck in Hormuz right now. But for every solar panel that makes it through, that’s secure energy every day for a generation. Renewables and energy efficiency are the only realistic way to escape this crisis loop,” said Richard Smith, Senior Policy Advisor, Global Energy Transition, E3G.

“Asia receives nearly 90 per cent of the oil and LNG transiting the Strait of Hormuz, and the consequences of prolonged disruption will be felt unevenly across the region. For India, sustained high oil prices translate directly into widening current account deficits, currency pressure, and fiscal stress that could constrain both growth and public spending. Japan and South Korea, among the world's most LNG-dependent economies, face acute supply vulnerability with limited ability to absorb prolonged market tightness,” pointed out Madhura Joshi, Programme Lead, Global Clean Power Diplomacy, E3G.

“Energy systems are a backbone of national security, but for many importers, that backbone depends on infrastructure and routes far beyond their control. Reliance on distant supply chains and chokepoints means disruption risk is built in. Clean energy systems are not immune to shocks, but they shift more of the system under domestic control and reduce exposure to geopolitical and market volatility. That is the strategic energy security lesson from this crisis,” noted Maria Pastukhova, Programme Lead, Energy Transition, E3G.