The six-month US-Israel war with Iran has triggered a major energy-cost shock, leaving fossil fuel-importing countries with an estimated additional $330 billion bill, according to a report by the Centre for Research on Energy and Clean Air (CREA).
The report, What the Hormuz Crisis Has Cost Fossil Fuel Importers — March to August 2026, estimates that importers paid substantially more for seaborne crude oil, refined petroleum products and liquefied natural gas (LNG) than they would have under market expectations before the conflict. The estimate represents the gross additional cost and does not include higher export earnings recorded by fossil fuel-producing countries.
Crude oil accounted for the largest share of the additional cost at $164.1 billion, followed by diesel and gasoil at $73.8 billion, LNG at $38 billion, gasoline at $35.7 billion and jet fuel at about $20 billion.
The crisis sharply increased energy prices across major markets. Asian LNG prices averaged 75 per cent above pre-war expectations during the period, while European gas prices were 60 per cent higher. Diesel prices were 59 per cent above expectations, gasoline 43 per cent higher and Brent crude 35 per cent higher.
Brent crude averaged about $93 a barrel during the six-month period and reached $105 a barrel on July 23. CREA said oil remained above its pre-conflict level on 94 per cent of trading days.
India, China and Europe among hardest hit
The European Union recorded the largest gross additional cost at $78 billion, followed by China at $35 billion and India at $22 billion.
For India, the net cost after accounting for additional export earnings was estimated at $14.4 billion, equivalent to 0.38 per cent of GDP. China recorded the largest net cost at $31.7 billion.
India’s cooking-fuel market was also affected. The country paid about 29 per cent more per tonne for imported liquefied petroleum gas (LPG) than pre-war market expectations, even as imports declined by 26 per cent.
CREA estimates that India’s additional LPG import cost reached about $1.1 billion. However, the figure reflects import-parity costs and does not necessarily represent the final price paid by households, which is also affected by taxes, subsidies and distribution costs.
Europe and East Asia carried the largest regional net burdens, with the European Union recording about $54 billion and East Asia $49 billion. South Asia’s net cost was estimated at $18.5 billion, while Southeast Asia lost about $13.9 billion.
By contrast, major fossil fuel-exporting regions benefited from higher prices. The Middle East recorded an estimated $61.2 billion net gain, North America $47 billion and Russia $35.9 billion.
Developing economies face heavier relative burden
The energy shock has had a disproportionately greater impact on poorer importing countries.
CREA estimates that a typical low- or lower-middle-income fossil fuel importer suffered an additional cost equivalent to about 1 per cent of GDP, compared with 0.45 per cent for a typical high-income importer.
Egypt was the most exposed among the 20 largest payers, with an additional cost equivalent to 1.33 per cent of GDP, or nearly five days of national income.
Clean energy limits the damage
The crisis has also highlighted the growing economic value of renewable energy.
CREA estimates that additional clean electricity generated during the first five months of the crisis helped importing countries avoid about $36 billion in fossil fuel imports, including $22 billion in gas, $10 billion in coal and $5 billion in oil.
The finding suggests that investment in renewable energy is increasingly serving not only climate objectives but also as a buffer against geopolitical and energy-market shocks.
CREA said its $330 billion estimate is conservative because it excludes several additional costs, including freight and war-risk premiums, pipeline gas, coal, fuel oil and other petroleum products.
The report compared actual energy prices between March and August with futures-market expectations recorded shortly before the conflict. While other market factors may have influenced prices, CREA said the sharp price increase immediately after the March 2 strikes indicates that the conflict was a major driver of the energy shock.
The wider lesson is clear: geopolitical conflicts in major energy-producing regions can quickly become a global economic problem, with importing countries—particularly poorer economies—forced to absorb higher energy costs that can feed into inflation, transport, food prices and household living expenses.
