- US-Israel strikes on Iran led to a fragile ceasefire, with no clear military victor yet
- Energy dependence shaped countries' diplomatic freedom during the Gulf crisis
- Pakistan's solar surge increased energy security and boosted its diplomatic role
Iran War Fallout: When the United States and Israel launched strikes on Iran and killed its Supreme Leader on February 28, they expected a swift end to the conflict. The objective was well defined: a regime change in Tehran and the elimination of Iran's capability to develop a nuclear weapon.
More than two months later, it looks like a stalemate rather than a decisive military victory. While both sides have agreed to a ceasefire, US President Donald Trump has said that the truce remains fragile. Thus, a fresh round of strikes cannot be ruled out. And if that happens, Iran is likely to respond by targeting military or civilian infrastructure across the Gulf.
Therefore, at this stage, it would be premature to declare any of the warring parties victorious. Yet, several unexpected winners have emerged. The war may not have produced a clear military victor, but it has revealed a "hierarchy of resilience". When disruption at the Strait of Hormuz sent shockwaves through global trade, the world underwent an unplanned stress test.
Some countries discovered that their foreign policy, fiscal stability, and diplomatic voice were hostage to oil tankers. Others realised they could absorb the shock and still speak freely.
That difference -- not battlefield success -- determined who gained. The dividing line was energy structure.
Energy Structure Became Diplomatic Power
Across Asia, governments heavily dependent on Gulf oil fell conspicuously silent. Fuel rationing, emergency subsidies, and currency pressures narrowed their diplomatic space. Criticising Tehran risked tanker access. Criticising Washington risked sanctions relief. Hence, diplomatic silence became policy.
In contrast, countries with large domestic renewable capacity behaved differently. For instance, Spain, which generates more than half of its electricity from wind and solar, did not automatically align with US operational requests during the crisis.
Similarly, Brazil runs one of the cleanest power grids in the world -- nearly 90 per cent hydro, wind, and solar -- and fuels transport with domestically produced ethanol. Therefore, BrasÃlia could openly oppose the US strikes without fearing energy retaliation.
These were not ideological positions. They were enabled by energy cushions.
The most striking case was Pakistan. In 2020, solar contributed under 3 per cent to Pakistan's power mix. By the end of 2025, solar's share had crossed 32 per cent -- one of the fastest energy transitions recorded globally in such a short span.
This shift was not driven by climate policy. It was market-driven:
- Decline in Chinese panel prices
- Rapid rise in grid tariffs
- Mass rooftop adoption by households and industry
- Net-metering incentives and informal financing models
Energy analysts estimate this solar boom helped Pakistan avoid over $12 billion in oil and gas imports between 2020 and 2025. Projected savings for 2026 alone are estimated at $6.3 billion.
This mattered during the war. Besides, Islamabad positioned itself as a mediator between Tehran and Washington, giving Pakistan some diplomatic relevance that had eluded it for years.
China's Structural Advantage
As governments rushed to approve renewable projects after the Hormuz disruption, one fact became unavoidable: the supply chain for solar panels, batteries, and electric vehicles runs through China.
Beijing dominates:
- Solar module manufacturing
- Grid-scale battery storage
- Electric vehicle production
- Inverters and grid hardware
Countries attempting to escape oil chokepoints do not have the luxury of building domestic capacity from scratch. They import, and they import from China.
The war accelerated orders that were already in the works. It also increased political comfort with reliance on Chinese clean-tech infrastructure, because wind and sunlight cannot be blockaded the way oil shipments can.
Beijing's influence expanded without intervention. The market delivered it.
Russia's Oil Became Strategically Convenient (Again)
As Gulf supplies turned uncertain, buyers quietly returned to discounted crude from Russia.
Sanctions enforcement softened in practice as Washington scrambled to stabilise global supply. Purchases from India and other Asian economies rose sharply. Moscow earned billions in additional revenue within weeks.
The war did not rehabilitate Russia politically. It made Russian oil economically indispensable once again.
UAE's Bet On Bypass Routes Paid Off
Within the Gulf, the United Arab Emirates (UAE) appeared relatively insulated. For years, Abu Dhabi invested in:
- Fujairah port outside the Strait of Hormuz
- Maritime logistics and storage
- Alternative trade corridors into the Indian Ocean
- Advanced port surveillance and logistics technology
When Hormuz risk escalated, these investments shifted from strategic foresight to operational advantage. The UAE was less exposed than neighbours whose entire export architecture depends on the strait.
Here, ports, routes, and logistics mattered as much as oil reserves.
Meanwhile, countries such as Norway and Canada saw rising demand as "safe" suppliers far removed from missile ranges and maritime chokepoints.
Meanwhile, coal exporters like Indonesia also benefited as Asian economies temporarily reverted to coal to manage shortages. These nations did not shape the war. They simply profited from its consequences.
What The Crisis Rewarded
| Country/Group | Structural advantage | How it translated into gains |
| China | Dominance in clean-tech supply chains | Surge in renewable orders and political influence |
| Pakistan | Solar share rose from <3% to 32% in five years | Diplomatic space to mediate, avoid import panic |
| Russia | Discounted crude outside Gulf risk | Rapid rise in Asian purchases, higher revenues |
| UAE | Fujairah and logistics outside Hormuz | Lower exposure, validation of corridor strategy |
| Spain, Brazil | Majority renewable grids | Freedom to take political positions |
| Norway, Canada | Stable oil producers away from conflict | Increased demand and revenues |
| Indonesia | Large coal exports | Short-term demand spike from importers |
While energy-secure nations found room to manoeuvre, several oil-dependent economies absorbed the harshest shock of the war. India is also staring at heavy losses if the Iran war drags on. As of mid-May 2026, the Iran war has inflicted significant economic pressure on India. It is projected that India will take a fiscal hit of Rs 2 lakh crore ($24-$25 billion) due to the impact of the war.
Sri Lanka, still recovering from its 2022 balance-of-payments crisis, saw its fuel import bill spike again, forcing tighter rationing and renewed pressure on foreign reserves. Similarly, Bangladesh faced rising LNG and diesel costs that strained its subsidy regime and widened its current account stress. In Nepal, entirely dependent on imported petroleum routed through India, transport costs surged, feeding domestic inflation. Across Africa, Kenya and Ethiopia struggled with higher landed fuel prices that weakened currencies and inflated food and freight costs.
These countries had no role in the conflict, no diplomatic leverage in it, and no buffer against its consequences. For them, the Strait of Hormuz disruption was not a geopolitical signal but a direct economic hit -- one that translated into costlier food, transport, and electricity for ordinary citizens.
