When the United States and Israel started their attacks on Iran in February, the public narrative was largely about security. The global narrative is now about energy. With oil and gas prices soaring, countries are facing shortages and blackouts. Tehran’s leadership knows this and is holding the global economy hostage as a negotiating tool in discussions with the United States.

Over the past few decades, there was a growing belief that the connectivity of energy markets, an abundance of supply, and the growth of renewables would mean that countries would no longer try to use energy as a foreign-policy cudgel. Assuming so would be a mistake, argues Meghan O’Sullivan, a Harvard University professor and the author of Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power.

I spoke with O’Sullivan on the latest episode of FP Live and explored why energy is back as a weapon and how countries should try to navigate this moment. Subscribers can watch the full discussion on the video box atop this page. The transcript that follows here is a lightly edited excerpt of our conversation.

Ravi Agrawal: Oil prices have jumped some 80 percent year to date. Jet fuel has doubled. There are blackouts in Asia, fuel rationing in Europe and elsewhere. All of this is because the Strait of Hormuz is responsible for carrying a fifth of all global crude and of natural gas. How does this current moment compare to previous energy shocks?

Meghan O’Sullivan: The obvious energy shocks to compare it to are the shocks of the 1970s. First, the 1973 oil embargo, when Arab members of OPEC declined to export their oil to the United States and other supporters of Israel in the 1973 Arab-Israeli War. Then there was the oil shock after the Iranian Revolution later that decade.

If we look at 1973, both the percentage and the physical number of barrels that were taken off the market is considerably less than is happening today. This is the biggest supply disruption that we’ve ever seen. We’re talking about 10 million barrels of oil a day that essentially are not on the market that would be on the market normally, as well as about 20 percent of the world’s liquefied natural gas (LNG) capacity.

This is a bigger supply disruption than in 1973. However, the market has not responded. The prices have gone up considerably, as you noted, but you might think that the price would double or triple or quadruple as it did in the 1970s. There are a number of reasons for that. The biggest reason is that up until now—and I expect this to change in the coming week or two—the market has really not priced in the geopolitical risk we’re facing. It has been very attentive to President [Donald] Trump’s claims that we are almost done, that the war is nearing an end, that the mission is largely accomplished. The idea that this level of disruption could go on for more weeks or even months has not really been internalized by the market.

There are other good reasons, too. The reaction to 1973 was a whole set of reforms that individual countries made to their own energy systems to make them less oil intensive, as well as to the architecture of the global energy system. There were decades-long endeavors to make the oil market and then later the LNG market more integrated, more global, more resilient to shocks. In many ways, this has helped us manage this shock, even though people filling up their gas tanks may not feel like it’s been managed.

RA: It’s worth noting that another difference between the 1970s and now is that for most countries, average deficits are more than twice what they were then. So countries have less fiscal room to subsidize fuel or deal with inflation, which could make the impacts much worse if the war drags on.

MO: This is some kind of combination of what we saw during COVID and the energy shock we saw after the Russian invasion of Ukraine. It’s not as severe, nearly, right now. It’s still, I would say, a fraction of both of those shocks to the system, but with a very clear potential for getting much more significant.

RA: You and Jason Bordoff, who was on FP Live last month, have written about the idea of energy as a weapon, as a foreign-policy cudgel for countries to deploy in a crisis. I’m thinking here obviously of how Iran has chosen to close off the Strait of Hormuz to hurt the global economy in response to attacks on its soil. Why did this go away as a weapon in recent decades? And why is it back?

MO: I would say it never went away. It just receded to the background. Part of it allows me to pick up where I left off with the 1970s and the world’s reaction to becoming more integrated, to building up the global market in a way that oil became the most easily traded commodity in the world. This is a very flexible global market. You can buy and sell pretty much in any part of the market, and the market will help that barrel of oil find its way to the most efficient destination. This evolved over time and made the prospect of using energy as a weapon less attractive, because the market could diffuse the shock of cutting off a single supplier.

After the collapse of the Soviet Union, the world’s energy markets continued to become more and more integrated. America went from being a significant importer of oil—60 percent of its oil being imported before the shale boom—to now being a net exporter of oil. This era of energy abundance was complemented by other forms of energy coming online, such as natural gas and renewables. Countries from the United States to China felt more comfortable that they didn’t need to worry about energy scarcity, and that they can rely on the market to meet their energy needs. Weaponization was no longer something that countries thought that much about.

RA: And then? Take us from that moment to where energy becomes this weapon that countries think about using and then successfully deploy.

MO: We started to see the conditions under which weaponization became more attractive about five years ago. The moment where it becomes obvious is the Russian invasion of Ukraine. Russia started to use natural gas as a weapon to set the stage for its invasion of Ukraine in 2021, when it began to limit the amount of natural gas it was selling to Europe so that Europe wouldn’t have a lot of stocks or resilience in the face of a cutoff.

It became clear that despite all the abundance that I just talked about, energy was still very much a tool of foreign policy. Why that became a reality has more to do with our geopolitics. We went from being a world where politics were pretty copacetic. You didn’t have great-power rivalry. You didn’t have Russia and China and the United States and Europe at each other’s throats. It’s just around the time of COVID and the Russian invasion of Ukraine in 2022 that we really entered an era of great-power competition. The countries that are in competition are looking for the best tools. After COVID, global integration isn’t providing the same kind of reassurance to countries that it did in a world where politics were much more conducive to peace and prosperity.

So it’s a combination of these factors. It’s the energy system itself, it’s great-power rivalry returning, and it’s the changing nature of globalization that creates the circumstances where the energy weapon is ripe for usage. In an article Jason Bordoff and I wrote at the end of last year, we’re saying, “Get ready, put on your seatbelt, more energy weaponization ahead.” Certainly, that’s what we’re seeing in 2026.

RA: You certainly did predict, or at least warn, that a moment like this—with the Strait of Hormuz shut off—could hurt all of us. Another prediction you made in Windfall, Meghan, was that low oil prices would leave Russia economically stressed, which in turn could make it more likely to turn to military distractions. Do you see Russia as a winner from the current conflict in the Middle East, and does this then incentivize a kind of a strategy from petrostates to stir up conflicts and drive up the price of oil?

MO: Certainly, Russia has thought about stirring up geopolitical tensions as a way of increasing the price of oil. This has been documented by historians who have looked through Politburo notes from the end of the Soviet empire: It was actively debated whether the Soviet Union should stir up problems in the Middle East simply to increase the price of oil. I wouldn’t go so far as to say that Russia had any particular hand in instigating this phase of this conflict, but I agree that for the moment, Russia is really benefiting from this.

It’s not only in the oil prices—the distraction, geopolitics, and divisions between the United States and its NATO allies are of great benefit to Russia. Economically, this helps Russia, but I don’t know that it will help Russia to the extent that a petrostate can exist indefinitely in this geopolitical age.

I’m still of the view that the world is going to continue its pursuit of a more sustainable global energy economy over time. That timeline may have been pushed out by this conflict and other realities, but I don’t think we’re going to reverse course on that. Ultimately, Russia under [President Vladimir] Putin has shown no interest, and certainly has made no effort, to try to position itself for a world where oil isn’t as valuable a commodity as it is right now.

RA: It’s striking to me that the United States is quite relatively insulated when it comes to energy shocks. The price of the pump is up by about a third, but if you look at the rest of the world, they’re suffering way more in a variety of ways. Is there anything that countries and policymakers should be thinking about to protect themselves from an era where more countries deploy the energy weapon, as you’ve put it?

MO: The point about the U.S. is very well taken—that the suffering that is happening in the U.S. economy is relatively mild compared to other parts of the world, and it’s also affecting the U.S. economy in a very different way than the 1970s oil shock did.

America now being a net exporter of oil means that when the price of oil goes up, it’s a huge benefit to U.S. energy companies. We’ve seen record amounts of exports of U.S. refined petroleum products and very high exports of U.S. LNG in March. So that accrues to producers in the U.S. economy, which is still a political issue, as President Trump is feeling: The distribution of that wealth changes inside of America, rather than between America and, say, the Middle East. So consumers bear some of the cost, but producers and companies are benefiting, so it’s an interesting political point.

Jason Bordoff and I wrote about what other countries might do in Foreign Affairs. We call it the “Iran shock” and the dangerous illusion of energy autarky, which is the idea that many countries are probably thinking, “Wow, exposure to this global market is dangerous, and we want to pull away from this global market.”

That could manifest itself in a number of ways. If you’re China, it might mean stockpiling energy. Fatih Birol, the executive director of the International Energy Agency, warned countries that stockpiling would worsen the conflict and urged them to have confidence in the global market. When it comes to oil and gas, continuing to be integrated into the global market is going to be better than the alternatives. Putting up tariffs or subsidies will probably make managing the economic dislocation even more difficult.

However, a longer-term issue is to try to produce more of your energy at home. The United States has the option to produce more oil and gas, and a lot of people in the current administration will opt in that direction. But most countries will adopt this advice by saying, “Is there more I can do in terms of renewable energy and electrification, and can I make my economy more dependent on the kind of energy that I can produce within my own border?”

This is going to give a boost to the energy transition, because most of the kinds of energy that you can produce and consume in countries without favorable geology are renewable. The downside is that this is going to make many more countries and economies—at least in the medium term—susceptible to political and economic pressure from China, because China has dominance over clean energy supply chains.

So the energy weapon is back, but it’s not just the old weapon. It’s not just oil and gas; it’s also the weaponization of clean energy supply chains. Policymakers have to learn to live with both of those realities, and the prescriptions are different for both.