Strait of Hormuz Closure: How Middle Eastern Crises Are Reshaping the Global Nuclear Energy Landscape

The United States and Israel launched Operation Epic Fury in late February 2026, targeting Iran’s nuclear and missile infrastructure and seeking to remove its political leadership. Although the operation achieved its initial tactical objectives with high precision, it provoked an asymmetric retaliatory response from the remaining Iranian forces. This response took the form of a comprehensive blockade of the Strait of Hormuz, the world’s most critical maritime artery for energy transport, triggering a severe global economic shock. Such disruption could propel the international system towards reducing its reliance on fossil fuels and accelerating the adoption of alternative domestic energy solutions, most notably nuclear power.

At the same time, global electricity demand is rising sharply, driven by the rapid expansion of advanced artificial intelligence infrastructure and high-performance computing facilities. This sudden disruption of fuel supplies places policymakers in major industrial economies under immediate economic and security pressures, while simultaneously exposing the profound consequences of closing the Strait. In this context, the present analysis examines the repercussions of the Strait of Hormuz's closure on global supply chains. It then develops a historical comparison with the oil price shocks of the 1970s, illustrating how those crises redirected states towards nuclear technology. The study concludes by analysing emerging regulatory and financial measures, as well as new geopolitical alignments, that are accelerating the global drive to construct nuclear reactors in 2026.

On Feb. 28, 2026, the United States and Israel launched a joint military operation codenamed Epic Fury, aimed at eliminating Iran’s nuclear threat, dismantling its proxy networks, and subsequently disabling its naval capabilities.

To achieve these objectives simultaneously, the United States Department of Defence employed advanced artificial intelligence models to analyse intelligence data. These systems guided Israeli fighter aircraft with exceptional precision, enabling them to bypass conventional radar systems and carry out a coordinated strike that killed the Supreme Leader, the Minister of Defence, and several senior officials. Shortly thereafter, United States forces proceeded to destroy air defence systems and missile production facilities, followed by the sinking of approximately forty-three warships.

Despite these developments, the Iranian Islamic Revolutionary Guard Corps (IRGC) overcame its military losses and adopted a strategy centred on raising the cost of the attack at both the regional and global levels. It launched a counter-military campaign, directing drones and ballistic missiles towards Israeli targets, United States military bases, and critical Gulf energy facilities.

Subsequently, it moved to implement a highly consequential strategic step by imposing a full blockade on the Strait of Hormuz, through which roughly one quarter of global oil trade and one fifth of liquefied natural gas supplies pass. Iranian forces targeted commercial vessels belonging to international shipping companies, forcing major maritime carriers to suspend operations and reroute their shipping lanes entirely. As a result, global markets experienced an immediate and severe economic shock, with energy prices rising sharply once investors became convinced that the strait’s closure could persist for an extended period.

Iranian forces then moved to disrupt the region’s energy infrastructure. They targeted an oil refinery in Saudi Arabia, halted production at an Iraqi oil field, and disrupted Qatari gas export operations. In contrast, Iranian oil production and exports came to a complete standstill. As a result, Brent crude prices surged by 13%, exceeding $82 per barrel, and continued to rise in the weeks that followed.

European natural gas futures also climbed by more than 70%, while maritime insurance costs increased by 50%. These developments strengthened the US dollar and constrained central banks’ ability to lower interest rates. The following figure illustrates the shifts in energy prices and insurance costs following the closure of the strait:

From this perspective, the crisis revealed the acute vulnerability of Asia’s industrial economies and their heavy reliance on Middle Eastern transit routes. Japan imports approximately 95% of its oil requirements from the region, while South Korea depends on the same strait to secure the bulk of its energy imports. Consequently, the closure disrupted the primary supply routes for 84% of Asia’s oil imports, leaving major manufacturing sectors reliant on rapidly diminishing reserves.

The repercussions extend beyond energy prices alone. Recent developments have demonstrated the close and direct link between energy security and food security. Modern agriculture relies heavily on natural gas and fossil fuels for fertiliser production and transportation. As a result, the surge in energy prices drove up global fertiliser costs by 6.5% in a single month. In this context, the closure of the strait exposed both national security and the global economy to geopolitical risks that threaten broader systemic stability.

Understanding the trajectory of the nuclear resurgence in 2026 requires examining the geopolitical and economic conditions of the 1970s. The current crisis surrounding the closure of the Strait of Hormuz echoes the first oil shock that followed the 6 October War in 1973, when Arab states imposed an oil embargo on the United States and its allies in solidarity with the Arab forces engaged in the war with Israel. As a result, oil prices quadrupled by 1 January 1974, disrupting economic growth for nearly three decades. During that period, the value of a barrel of oil rose from $45 billion to $116 billion between 1973 and 1974. In response, industrialised nations fundamentally reshaped their energy policies, laying the groundwork for the transformations that are unfolding today.

Within the same context, the 1973 shock severely tested Western economies, prompting divergent responses that can be understood through the experiences of the United States and France in particular. In the United States, President Richard Nixon announced the “Project Independence” initiative, which aimed to build 1,000 nuclear reactors by the year 2000.

This initiative later faltered. The United States possessed abundant domestic reserves of oil, coal, and natural gas, which meant that the new and costly technology did not become a strategic priority. Moreover, the American energy system at the time was highly decentralised. The construction of nuclear reactors required navigating complex financing arrangements and a regulatory environment increasingly shaped by public opposition. Anti-nuclear movements capitalised on the public anxiety generated by the Three Mile Island accident, successfully using legal mechanisms to halt the planned expansion. At its peak, the United States operated 112 nuclear reactors in 1991, yet nuclear power never accounted for more than 21% of the country’s total electricity generation.

By contrast, the French response proved remarkably successful. In the early 1970s, France relied on oil to generate roughly half of its energy, importing 99% of its oil needs. Consequently, the tripling of import prices posed a severe threat to the national economy. The government anticipated that petrol prices would rise by 20% and heavy fuel oil by 120% by January 1974.

Recognising the absence of viable alternatives, France’s Advisory Committee on Nuclear Energy recommended expanding the national grid by 13,000 megawatts. Shortly thereafter, on March 5, 1974, Prime Minister Pierre Messmer announced the Messmer Plan, which aimed to construct six to eight nuclear reactors annually, bringing the total to more than 50 reactors within a decade.

The success of the French experience rested on a strong, centralised technocratic system. The government decided to transform the national energy system within just three days. It subsequently reduced costs by standardising light-water reactor designs and placing their management under a single national utility. As a result, nuclear power’s share in France’s energy mix rose dramatically from 3.9% in 1970 to 75% by 1990. The following figure compares the evolution of nuclear energy’s share in the energy mix of the two countries.

Nevertheless, the pursuit of energy independence generated significant risks related to nuclear proliferation. France, facing economic stagnation, was compelled to seek foreign capital to finance its ambitious programme. This necessity gave rise to an arrangement later described as an “oil-for-atoms” exchange, in which Iran offered oil in return for nuclear technology.

By late February 1974, a Franco-Iranian committee had begun laying the foundations for the transfer, enabling Shah Mohammad Reza Pahlavi to advance Iran’s nuclear capabilities. This development, in turn, encouraged other states to pursue similar arrangements. Iraq succeeded in acquiring a nuclear reactor, while Saudi Arabia also expressed considerable interest in entering the nuclear field.

As a result, this rush triggered commercial competition among France, Italy, West Germany, and Japan to secure Gulf oil. At the same time, France undermined the efforts of United States Secretary of State Henry Kissinger to establish a unified international approach. At the Washington Energy Conference in February 1974, Kissinger proposed a code of conduct, yet the initiative encountered explicit rejection from his French counterpart, Michel Jobert.

Consequently, the United States failed to halt the export of European nuclear technology to the Gulf despite establishing the Nuclear Suppliers Group. These developments planted the seeds of later crises in Iran and Iraq. The race to secure energy security thus moved beyond, and ultimately weakened, the global frameworks designed to prevent nuclear proliferation. This experience offers an important strategic lesson in light of the energy disruptions unfolding in 2026.

The conflict generated by Operation Epic Fury in 2026 triggered a broad shift towards the adoption of nuclear energy, coinciding with the rapidly expanding demand for electricity to power digital infrastructure. The United States faces significant threats to its national security as a result of its reliance on foreign supply chains, while simultaneously confronting intense geopolitical competition with China and Russia, both of which dominate global markets for nuclear construction and fuel supply.

In response, the federal government launched a comprehensive reform of the American nuclear sector. The process began when President Donald Trump issued four sweeping executive orders on May 23, 2025, collectively aimed at quadrupling the United States’ commercial nuclear capacity, increasing it from 100 gigawatts in 2024 to 400 gigawatts by 2050.

Within the same framework, Executive Order No. 14300 fundamentally restructured the Nuclear Regulatory Commission’s responsibilities. The United States had licensed 133 nuclear reactors between 1954 and 1978. Since 1978, however, the Commission has approved only a very limited number of projects, with just two reactors entering commercial operation.

The new order, therefore, required the Commission to facilitate the expansion of nuclear energy and directed it to prioritise economic and national security benefits over traditional regulatory constraints. Accordingly, the administration imposed a strict timeline, setting a maximum of eighteen months for final decisions on the construction and operation of new reactors and only one year for the renewal of operating licences for existing facilities. In addition, the Department of Government Efficiency intervened in the Commission’s work, mandating the formation of a dedicated team of 20 specialists to draft new regulations to accelerate the regulatory process.

Despite these developments, the rapid pace of these reforms introduced significant institutional risks. The deliberate overlap between the responsibilities of the Department of Energy and the Nuclear Regulatory Commission (NRC) led to a decline in transparency, raising concerns that the Commission could evolve into little more than a formal certifying body for nuclear projects.

As a result, staff morale deteriorated, and the agency lost more than 10% of its specialised technical workforce within a single year due to layoffs and voluntary departures. These changes included the dismissal of former chairman Chris Hanson in June 2025. By mid-2026, the Commission was operating with only three commissioners, Annie Caputo, Bradley Crowell, and Matthew Marzano, and without a sitting chair. Consequently, its capacity to review the anticipated surge in licence applications for advanced reactors had become significantly constrained.

In parallel, the government directed substantial investments towards the development of small modular reactors rather than conventional large-scale reactors. The Department of Energy launched a pilot programme aimed at building and operating three experimental reactors by July 4, 2026, selecting 10 companies to accelerate the licensing of their commercial designs, including Oklo, Terrestrial Energy, and Deep Fission.

In December 2025, the Department allocated $800 million to the Tennessee Valley Authority and Holtec International to accelerate the deployment of small modular reactors. Holtec plans to deploy two SMR-300 reactors at the Palisades site, while the Tennessee Valley Authority is preparing to install a BWRX-300 reactor at the Clinch River location. In addition, the administration allocated $2.7 billion to expand domestic uranium enrichment capacity. Financial commitments were distributed to companies such as TerraPower and Kairos Power to secure fuel supplies and reduce Russian dominance in the sector. The government also selected four companies to construct nuclear fuel manufacturing facilities and granted Constellation a $1 billion loan guarantee.

The geopolitical repercussions of Operation Epic Fury and the blockade of the Strait of Hormuz extended far beyond the United States, reshaping global energy systems and security alliances. Asian economies that have historically depended on the strait adopted immediate and stringent economic and political measures. Countries such as Japan and South Korea recognised that asymmetric warfare relying on drones in the Middle East could abruptly disrupt their industrial capabilities. As a result, they began to move away from the domestic hesitation surrounding nuclear energy that had persisted since the Fukushima disaster.

Within this context, South Korea increased electricity generation from coal-fired power plants by an additional 4.8 gigawatts, bringing average output to 20.7 gigawatts in early March in order to compensate for shortages in liquefied natural gas supplies. At the same time, the Bank of Korea established a special task force to monitor emerging financial pressures.

As a result, the governments in Tokyo and Seoul accelerated the restart of previously suspended nuclear reactors in order to secure domestic energy stability and permanently reduce their dependence on Middle Eastern hydrocarbons. The blockade of the Strait of Hormuz effectively removed the remaining political and economic alternatives to nuclear energy for Asian economies, much as the October War had reshaped France’s energy strategy in the 1970s. At the same time, the disruption accelerated the pace of global geopolitical fragmentation. The strategic alignment among China, Russia, and Iran strengthened considerably. In response to the suspension of discounted Iranian oil supplies, Beijing began exploring alternative overland energy routes to bypass maritime corridors controlled by Western naval forces.

In sum, the closure of the Strait of Hormuz, together with the accompanying shifts in energy consumption, the escalation of nuclear protectionist policies, and intensified competition over market share, is likely to increase the long-term risks of nuclear proliferation in the Middle East. The current environment is creating the conditions for a highly competitive phase in global nuclear commerce that closely resembles the period of “oil-for-atoms” exchanges in the 1970s. This dynamic is reinforced by the Trump administration’s issuance of Executive Order No. 14299, which requires the United States government to pursue at least 20 new nuclear cooperation agreements under Section 123 by 2028 to strengthen American exports and counter foreign dominance in the sector. At the same time, the deliberate weakening of the independent NRC in order to accelerate domestic commercial deployment risks undermining the stringent non-proliferation safeguards historically associated with United States nuclear technology exports.

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