The ongoing conflict in Iran is reshaping global energy dynamics and could soon impact the American automotive landscape as well. With the U.S. and Israeli military operations targeting critical regions, including the Strait of Hormuz, the world’s energy supply has been disrupted significantly.
As the conflict enters its third week, critical oil shipping lanes through the Strait of Hormuz have been effectively closed. This strait is vital, as it typically handles up to 20% of global petroleum trade. Consequently, the closure has triggered a sharp increase in fuel prices worldwide. In the U.S., average gas prices have surged to $3.79 per gallon, a steep rise from $2.92 just a month ago, echoing the energy crises of the past.
However, unlike previous energy crises, the modern world has a powerful tool to mitigate the impact: electric vehicles (EVs). As the EV market continues to expand, its role in reducing oil dependency becomes increasingly evident. According to a recent report by the U.K.-based think tank Ember, the global EV fleet avoided the use of 1.7 million barrels of oil per day last year, nearly matching Iran’s daily exports through the Strait of Hormuz in 2025.
Electrifying Demand
In the United States, the momentum for EV sales faced a recent dip as the Trump administration rolled back many subsidies and incentives introduced by the Biden administration. These measures, which expired in September, led to a 2% decrease in EV sales for the year. Yet, the conflict in Iran has reignited consumer interest. CarEdge, a car shopping platform, reported a 20% increase in search traffic for EVs, with heightened interest in models like the Tesla Model Y and Chevrolet Equinox.
Higher gasoline prices are currently impacting those already considering buying a new vehicle, according to Elaine Buckberg, a senior fellow at Harvard University’s Salata Center for Climate and Sustainability. Persistent high prices, however, may drive more consumers to consider EVs for their fuel efficiency. “Gasoline prices are one of the biggest elements of people’s perception of inflation,” Buckberg noted, emphasizing the potential shift in consumer behavior.
Outside the U.S., EV owners are already experiencing significant savings. In the U.K., drivers save an average of £870 ($1,162) annually by charging their vehicles instead of refueling, as per an analysis by the Energy & Climate Intelligence Unit. If oil prices remain above $100 a barrel, these savings could increase to £1,000 ($1,336).
Nowhere to Hide
The Trump administration views the current fuel price surge as a temporary issue, citing the U.S. status as a major oil producer. However, Daan Walter from Ember points out that domestic production offers little protection against global price volatility. “Even if you live between a gas well and a refinery, even then your prices are going up,” Walter said, highlighting the interconnected nature of global oil markets.
The unpredictability in gasoline prices has long been a concern, with experts suggesting that reliance on locally generated electricity for transportation could serve as a safeguard. Elaine Buckberg stated, “A shift towards EV basically would protect the economy from downside,” underscoring the potential economic and political advantages of reducing oil reliance.
Since the last significant energy disruption caused by Russia’s invasion of Ukraine in 2022, the EV market has evolved considerably. The microchip shortage that once constrained EV manufacturing is no longer a bottleneck, and the vehicles have become more accessible. Particularly in emerging markets in East and Southeast Asia, electric and hybrid vehicles are gaining traction, according to Ember’s research. In China, the world’s largest EV market, the existing electric car fleet is saving the country over $28 billion annually in avoided oil imports.
“We’re no longer living in a world of risk-free fossil fuels,” Walter commented, highlighting the inevitable risks associated with all energy sources and the need to choose the most manageable ones.
Original Story at fortune.com