Global crude oil and natural gas markets have entered an era of structurally elevated volatility, driven by a rapid succession of major shocks that show no sign of abating, according to a commentary published by Yogi Schulz on EnergyNow.ca. The analysis traces the roots of modern oil price instability to October 1973, when Arab members of OPEC imposed the first crude oil embargo against the United States and other nations for supporting Israel during the Yom Kippur War. The embargo lasted until March 1974 and triggered a massive global energy crisis.
Since that moment, crude oil prices have remained volatile. Three landmark shocks in recent years have, however, pushed this historical pattern to a new threshold. The COVID-19 pandemic, which ran from March 2020 to the end of 2021, first caused a rapid implosion in demand, followed by an equally rapid resurgence, creating severe price turmoil on both ends.
Russia's invasion of Ukraine in February 2022 then compounded the instability through a series of cascading effects: the sabotage and destruction of the Nord Stream natural gas pipelines, which triggered a spike in European natural gas markets; the imposition of sweeping sanctions targeting the sale and distribution of Russian fossil fuels; the progressive damage inflicted on Russian fossil fuel infrastructure by Ukrainian drones, which by 2026 had meaningfully reduced crude oil supply; and the interception and detention by several navies of vessels in Russia's so-called shadow fleet, further constraining shipping capacity. The most consequential disruption, however, began in early 2026 with the outbreak of the Iran war, which according to Schulz has sparked the greatest disruption to crude oil and natural gas production and distribution in history. Military attacks and counterattacks have dominated this disruption, generating a significant spike in crude oil prices.
The long lead times required to repair damaged processing facilities are expected to weigh on energy markets for years to come. According to data cited from the U.S. Energy Information Administration (EIA, January 5, 2026), the petroleum market had been in a state of oversupply relative to consumption in recent years, a trend that kept prices soft and frustrated OPEC's ambitions to exert greater control over them.
This geographic diversification of supply sources is expected to provide some cushion against future shocks by limiting the market impact of any single disruption. Nevertheless, the underlying drivers of recent shocks, chiefly geopolitical and trade fragmentation, suggest the world is entering a period of more frequent and severe market disruptions. Several geopolitical flashpoints remain unresolved.
Russia, despite squandering enormous resources in Ukraine, shows no signs of abandoning its broader territorial ambitions. The Putin regime has reportedly attempted to destabilize at least 27 countries through a combination of cyberattacks, hybrid threats, election interference, disinformation and military shadow warfare, according to the commentary. China has reiterated its claim over Taiwan and the South China Sea and has significantly expanded its military capabilities.
Iran, despite the ongoing conflict, remains committed to regional dominance and nuclear ambitions, and in 2026 demonstrated a willingness to attack the petroleum infrastructure of neighboring states, breaking a long-standing tacit consensus among Persian Gulf nations against doing so. Rising global military spending, as documented by Al Jazeera in April 2026, is cited as a proxy measure for the increasing probability of armed conflict. On the trade dimension, US President Donald Trump's sweeping tariff measures against most trading partners have heightened concerns about the long-term reliability of the United States as an energy supplier and have accelerated efforts by many nations to achieve greater energy self-sufficiency.
While these tariffs did not directly affect fossil fuel trade, they did impact the petrochemical industry. China, meanwhile, has actively supported the development of alternative trade, payment, insurance and shipping networks that reduce the dominance of the US dollar and bolster the role of the renminbi (RMB) in global energy transactions. Beijing has also openly flouted Western sanctions by continuing to import large volumes of crude oil and natural gas from Iran, Russia and Venezuela.
Further fragmentation of global energy markets is driven by a growing number of producing countries, including Guyana, which has recently emerged as a significant supplier, and Argentina, which has expressed ambitions to expand production. The UAE's departure from OPEC following a dispute over production quotas also signals internal fractures within the broader OPEC+ framework. The energy transition itself introduces a new layer of vulnerability.
Renewables now account for nearly half of global electricity generation capacity, following a record surge in solar installations. While this progress is significant, heavy reliance on Chinese manufacturing of low-carbon technologies such as solar panels and battery storage systems creates a new form of strategic dependence. This is already generating trade and industrial tensions between Beijing and Western governments.
Furthermore, as fossil fuel demand slows, competition for market share among major producers, namely the Persian Gulf states, Russia and the United States, is expected to intensify, increasing the risk that energy becomes an even more potent geopolitical instrument. The commentary concludes that volatility, rather than stability, is likely to define global energy markets going forward. Countries seeking to insulate themselves from future shocks will need to build energy systems that are diversified, flexible and, most likely, domestically anchored.
Even a successful energy transition will not reverse climate change, and rising temperatures with increasingly frequent extreme weather events, including droughts, floods, hurricanes and heatwaves, will continue to disrupt energy production, transport and power grid infrastructure. Source: EnergyNow.ca, commentary by Yogi Schulz. Supporting data from the U.S.
Energy Information Administration (EIA), Al Jazeera, Voronoi, and the Pennsylvania Capital-Star.
Source: energynow.ca