The wars in Ukraine and Iran are producing compounding effects on global energy systems, forcing countries to reshape their energy security strategies, while blind to how the Strait of Hormuz standoff will end. Speaking at this year’s Atlantic Council Global Energy Forum, energy leaders highlight solutions that have improved energy security, particularly in response to Russia’s weaponization of gas, and identify vulnerabilities yet to be addressed as oil and gas traffic through the Strait of Hormuz remains severely constricted.
Central and Eastern Europe is building for resilience with reversed pipelines and small reactors
In a discussion on European energy corridors, policymakers from Romania, Bulgaria, and the United States said that Central and Eastern Europe has made striking progress reconfiguring its energy system since Russia’s 2022 full-scale invasion of Ukraine, but warned that the infrastructure was still not built to withstand the next crisis.
Lessons from Ukraine
- The war has rewritten the rules for how the region thinks about energy infrastructure. Karl Jensen, executive vice president of AECOM, said the central lesson was that survivability—not just efficiency—must be the organizing principle for energy systems. He pointed to Russia’s systematic targeting of Ukrainian power plants and grids as evidence that distance alone no longer shields countries from disruption.
- Ukraine itself faces an enormous gap. “They don’t have enough energy today and every part of the economic growth they want to leverage will require more energy than they have today,” Jensen said.
- George-Sergiu Niculescu, president of Romania’s energy regulator ANRE, said that Romania had stepped into the gap for its most vulnerable neighbors: “We have been keeping the lights on in Moldova for four winters now and for the first time in many years, natural gas is flowing west, not from the east.”
The discussion turned to one of Europe’s most energy-vulnerable corners. Ambassador Richard Morningstar, founding chairman of the Atlantic Council’s Global Energy Center and the panel’s moderator, asked what more needed to happen to bring reliable power to the Western Balkans, noting that Croatia’s Krk liquefied natural gas (LNG) terminal had been transformative but may not be enough on its own.
The Balkans challenge
- Kalin Peshov, chairman of Bulgaria’s Glavbolgarstroy Holding*, recalled that Kosovo faced rolling blackouts just four or five years ago and that it shows that “investment is the first thing that needs to be done,” he said, adding that solidarity mattered as much as money. “We need to be there for one another.”
- Niculescu agreed: “We are all interconnected, and we need to have energy flowing without any bottlenecks for countries across the whole region.”
Part of this adaptation is turning to more resilient energy supplies and diversifying the region’s mix. Romania has deployed more than seven gigawatts of renewables and expects two gigawatts of storage capacity to come online by the end of 2026. The country is also advancing Europe’s most developed small modular reactor project—a 462-megawatt NuScale facility at the former Doicești coal plant, which received a final investment decision in February.
A new energy mix
- Bulgaria is also interested in small modular reactor technologies. Peshov’s Glavbolgarstroy is a strategic co-investor in Blue Bird Energy, a joint venture aiming to deploy up to six GE Vernova* Hitachi BWRX-300 reactors in the country, and Peshov said ongoing talks with US firms were proof that the partnership model was working.
- Niculescu rejected the idea that gas and renewables were in conflict. Romania will begin exporting gas to the region when the offshore Neptune Deep field comes online in 2027, he said, and he sees no reason the two should compete. “They should complement each other and run together.”
- Jensen agreed but added that resilience should be the priority: “Green will always be part of the future of energy, but you can’t measure our future energy system on how it performs on the best day,” he said. “It is really how it serves the citizens on its worst day.”
Is the world seeing oil demand destruction?
Globally, energy architecture is experiencing fundamental change as a result of the effective closure of the Strait of Hormuz—to what degree systems will change has yet to be determined. With world energy markets facing substantial uncertainty, speakers at the Forum argued that the crisis would take the energy system in different directions.
Impacts on demand
While the strait’s closure has caused a historic energy shock with uneven immediate impacts, its duration and the conditions under which it will reopen will determine the future of energy demand.
- Reid I’Anson, macroeconomist at Kpler, noted that “we are seeing these disaggregations on the demand side,” as the Middle Eastern crisis reverberates across production of middle distillates. “Gasoline is ok; jet and diesel demand are not.”
- Helen Currie, chief economist at ConocoPhillips, argued that long-term demand shifts would be muted, saying “It’s way too early to know the long-term impacts on energy demand, including for oil and gas. Demand is making adjustments—I don’t know if I’d call it destruction.” Currie also noted that “the long-term element is first and foremost in how we allocate capital.”
- Alisa Newman Hood, executive vice president and general counsel for Excelerate Energy*, asserted that the crisis would do little to slow down growing long-term natural gas demands.
The state of infrastructure
- Regarding LNG, Newman Hood asked, “Do importers have the regasification capacity needed to take advantage of this LNG wave we’re expecting?” Newman Hood noted that for three South Asian countries—India, Bangladesh, and Pakistan—US LNG exports constitute about 30 percent of all natural gas supply, triple their prior share.
- In addition to the impact of the strait’s closure on energy prices, power providers must also meet the growing energy demand from data centers. Ahmet Oren, CEO of İhlas Holding, said that the size of the Japanese grid is being loaded onto the grid every year and asserted that renewables and hydropower would be “an answer to the data center challenge.”
- Oren also spoke extensively on Central Asia and noted that regional cooperation starts at the Chinese border and continues to Turkey, saying Central Asia “is a unified, long, corridor of trade, energy, and security cooperation.”
- But with no certainty around resolving the strait crisis, l’Anson raised the question around permanent system changes: “how much longer can [the Strait of Hormuz closure] go on for before you see structural breaks?”
*Excelerate Energy, GE Vernova, Glavbolgarstroy Holding are partners of the Global Energy Forum.
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