Navigating an unpredictable future: global architecture, energy, security

From a climate perspective, lower prices may soften urgency, but the experience reinforces long-term diversification.

Scenario 2: Intermittent escalation – agreement in months

The second scenario involves on-and-off escalation, with intermittent disruptions over several months.

Here, fragmentation becomes operational and visible in markets:

• Oil prices become volatile, potentially in the $85–110 range,
• LNG markets tighten,
• Shipping and insurance costs rise significantly.

The IMF suggests that such volatility could reduce global growth by 0.3–0.5 percentage points, particularly affecting emerging economies.

Regional implications:

• Asia: The most exposed region. LNG-dependent economies face price spikes, supply uncertainty, and industrial cost pressures. This could slow growth in major economies such as China and India and strain smaller importers like Pakistan or Bangladesh.
• Europe: Continued reliance on LNG makes Europe vulnerable. Price volatility could undermine industrial competitiveness and complicate energy transition policies, especially if governments revert to security-driven measures.
• Africa: Import-dependent countries face rising energy costs and fiscal pressure, while producers may benefit from higher prices-but with limited capacity to scale output quickly. Net effect is uneven and often negative.
• United States: The U.S. benefits partially as an LNG and oil exporter, capturing higher prices. However, global instability feeds back into financial markets, trade, and inflation expectations, limiting the net gain.

For the GCC: Higher prices support revenues, but uncertainty affects logistics, investment, and non-oil sectors.

From a climate perspective: High prices accelerate renewables and efficiency, but energy security concerns may reinforce continued fossil fuel dependence.

This reflects fragmentation: diverging regional responses to the same shock.

Scenario 3: No agreement – prolonged volatility through year-end

The third scenario is the most severe: no agreement, sustained tensions, and a structurally constrained Strait of Hormuz. Even partial disruption would significantly affect global supply.

• Oil prices could remain above $100 per barrel,
• LNG markets could face severe shortages,
• Global trade flows would be disrupted.