The Oxford Institute for Energy Studies (OIES) is one of the world’s most respected institutions in applied energy economics. Its researchers have produced decades of authoritative work on oil and gas markets, LNG pricing and the geopolitics of energy supply. For oil and gas industry analysts, the OIES offers keen insights.
Which makes it all the more telling — and dispiriting — that OIES has chosen to hitch its wagon so firmly to the ‘energy transition’ bandwagon. The institute’s recent special edition of the Oxford Energy Forum on the Hormuz Crisis, published in late May 2026 and posted on LinkedIn on Tuesday, illustrates this contradiction. Here is an institute that simultaneously commands respect for its empirical rigour on fossil fuel markets and yet, when it comes to the ‘energy transition’, reliably produces analysis shaped by the prevailing academic and institutional orthodoxy rather than by hard-nosed economic analysis.
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This is of course no surprise. Oxford University boasts the Smith School of Enterprise and the Environment which is explicitly committed to “the green transition to achieve Net Zero emissions and sustainable development”. The school’s ‘experts’ recently came out with a report that found it a “sheer fantasy” that utilising the remaining North Sea reserves of oil and gas would make UK energy more secure or that it would make valuable contribution to the economy and its households. It also claimed that renewables have become cheaper than natural gas-fired generation.
The contrast with what an independent Oxford mind can do when liberated from institutional groupthink is instructive. Sir Dieter Helm, Professor of Economic Policy at Oxford and one of Britain’s foremost energy economists, has spent years making the unfashionable but essential point that the costs of Net Zero are steep. In a recent podcast discussion and on his own website, Helm has repeatedly argued that “it is important to tell the public the truth, that it’s going to cost you” to decarbonise. An individual of Helm’s stature can afford intellectual honesty. An institution with funding streams, conference participation and reputational stakes in the ‘Net Zero consensus’ is in a far more constrained position.
The Hormuz crisis: what it actually reveals
The US-Israeli attacks on Iran in late February 2026 and the subsequent disruption of shipping through the Strait of Hormuz have generated what OIES itself describes as “one of the most severe energy shocks in modern history”. Daily transit through the strait has largely ground to a halt. Global LNG supply has been cut by around 20%. Gulf crude and liquids production losses have been estimated at close to 12-15 million barrels per day. Asian governments have scrambled to conserve fuel, release strategic reserves and secure alternative supplies from the United States and West Africa.
As an aside, it is now emerging that the lost Gulf oil exports are far smaller than thought, according to traders and shippers speaking to Reuters. Current disruptions could be as small as five to six million barrels per day as logistics adjust and different routes and means of transport alleviate scarcity.
The Hormuz crisis is, above all, a sharp reminder that the world still runs on fossil fuels — and will continue to do so for the foreseeable future. The Strait of Hormuz is barely 21 miles wide at its narrowest point, yet it carries approximately one-fifth of the world’s oil consumption and a similar share of global LNG trade. When crisis strikes, governments do not reach for intermittent renewable power. They rely on alternative sources of oil and gas and reducing consumption where possible. They release strategic petroleum reserves. They negotiate emergency LNG cargoes. They did not, it bears pointing out, plug in a few extra solar panels or go on a hurried campaign to build wind farms in the expectation that this would bail their economies out.
This is not a peripheral observation. It reflects the current state of global energy security. The OIES Hormuz special report treats the issue rather awkwardly — acknowledging the severity of the shock on one hand, while on the other nudging readers toward the conclusion that the crisis accelerates the case for energy transition.
The persistence of institutional groupthink
The OIES, to its credit, has done serious applied economic work on the mechanics of the Hormuz shock — the effects on refinery runs, crude trade flows, product markets and freight. Bassam Fattouh and his colleagues at the Oil and Middle East Programme have produced genuinely useful analysis. But the institute cannot help itself when it comes to the wider policy framing. The energy transition narrative is embedded in the DNA of how OIES frames its work, from its Energy Transition Research Programme to the recurring suggestion that crises like Hormuz should prompt a faster shift toward renewables.
Here one is reminded of a broader phenomenon in academic institutions. Even after the IPCC quietly abandoned its own extreme RCP8.5 scenario as “implausible”, most academic institutions have failed to reset their Net Zero advocacy. This despite the fact that this doomsday “business-as-usual” emissions pathway has underpinned thousands of alarming climate projections and much of the justification for urgency around the ‘energy transition’. It would seem, to turn the tables here, the “new deniers” are those who persist in ignoring what the IPCC’s own retraction of its most extreme scenario means for the cost-benefit calculus of aggressive decarbonisation policies. Roger Pielke Jr. has documented this with characteristic rigour, noting that “the policy machinery built on RCP8.5 and other implausible scenarios is systemic”. Institutional inertia, in other words, outlives the ‘scientific’ basis that once seemingly justified it.
OIES is not immune to this inertia. An Oxford institution with the OIES’s profile simply cannot afford, in the current academic and funding environment, to adopt a posture that the energy transition narrative is bereft of economic logic. Independent scholars like Prof. Helm can afford heterodox conclusions. Institutions with stakeholder relationships across governments, international agencies, and ESG-sensitive corporate partners cannot — at least not easily.
The developing world has made its choice
Perhaps the most egregious analytical failing in the energy transition orthodoxy that the OIES report implicitly endorses is the claim that developing countries are now embracing intermittent renewables as a route to reducing their exposure to oil and gas geopolitical disruptions — such as the Hormuz closure. This is not borne out by the evidence.
The reality is that we are seeing precisely the opposite response. Many Asian countries most exposed to the Hormuz shock are doubling down on coal as the reliable, dispatchable foundation of their energy systems. Authorities in South Korea have, among other immediate actions such as price caps, lifted restrictions on coal-fired generation. India has directed coal plants to operate at maximum capacity, leveraging domestic reserves to stabilise electricity supply. Bangladesh, Thailand and Vietnam have also increased coal outputs as energy security concerns mount. China appears to have been be somewhat shielded from Middle East conflict-driven price shocks by its significant energy reserves and diversified energy supply. Policymakers in these countries, in the main, realise the need for greater dispatchable generation capacity, more storage of fossil fuels and a diversified supplier portfolio.
Why? Because no country has ever successfully industrialised on the basis of non-dispatchable, intermittent wind and solar power. Not one. The historical record is unambiguous, as Vaclav Smil’s monumental work attests to. Every nation that has achieved sustained economic development has done so on the back of reliable, affordable, continuous energy — coal, oil, gas, hydro, nuclear. Given prohibitively expensive battery storage, wind and solar with their requirement for dispatchable backup power generation cannot fill that role at scale.
The empirical picture is consistent: the global energy system is not transitioning away from fossil fuels on any timescale relevant to current policy debates. Demand for oil, gas, and coal continues to grow in the developing world, even as Western nations (minus Trump’s America) add renewable capacity at enormous cost to their consumers and to grid stability.
The myth of cheap renewables
Central to the energy transition narrative — and one that pervades the policy framing OIES adopts — is the false claim that solar and wind are now cheaper than fossil fuels. This claim deserves to be demolished clearly and firmly, because it rests on a fundamental confusion between marginal costs and system costs. The Levelised Cost of Energy (LCOE) — the misleading metric used to declare renewables the cheapest option — captures only the costs of generating a unit of electricity from a wind farm or solar panel in isolation. It entirely ignores the system costs imposed on the wider grid by intermittent generators. It is indeed time to stop pretending that renewables are cheap.
These system costs are substantial. They include the cost of backup generation (gas peakers, typically) that must be kept on standby for when the wind doesn’t blow and the sun doesn’t shine; the cost of grid balancing and frequency regulation; the cost of transmission infrastructure to connect remote wind and solar sites to load centres; and the cost of battery or pumped hydro storage. When these system costs are properly accounted for, the ‘cheap renewables’ claim collapses. Prof Helm makes essentially the same point on his website, noting that renewables are “capital-intensive” as they share the economics of utilities — large fixed and sunk costs — not the zero-marginal-cost miracle that their promoters claim.
It would be unfair to single out OIES as uniquely captured by energy transition orthodoxy. The same institutional pressures operate on virtually every major academic energy research centre in the Western world. The European University Institute, the International Energy Agency, Imperial College London’s Energy Futures Lab, UCL Institute for Innovation and Public Purpose — all operate within a funding and reputational environment that makes heterodox conclusions about energy transition punitively costly to publish and defend.
The OIES has done important work on the mechanics of the Hormuz shock. It has tracked the effects on refining runs, crude trade flows and product markets with characteristic professionalism. The institute’s Bassam Fattouh and colleagues at the Gas Programme have produced genuinely useful analysis on what the LNG market disruption means for Europe and Asia. None of this is in question. The issue is the policy framing that surrounds and shapes this otherwise solid empirical work — a framing that consistently tilts toward energy transition conclusions that the institution’s own market analysis does not support.
Reality has not read the transition roadmap
The Hormuz crisis of 2026 has delivered the most powerful empirical rebuke to energy transition orthodoxy in a generation. When the chips are down — when a military conflict significantly reduces global oil and LNG supply — every government on the planet responds with the same toolkit: strategic petroleum reserves, emergency fossil fuel procurement and access to alternative oil and gas suppliers. Not a single country activated its ‘renewable resilience strategy’. Not because the idea of wind and solar power is wrong in principle, but because the physical reality of intermittent, weather-dependent energy makes it unsuitable for crisis management or for long-run development.
Respected institutions like OIES do their best work when they apply rigorous economic analysis to energy markets without fear of where it leads. The Hormuz crisis has given them — and us — a vivid, real-world experiment in what the global economy actually runs on. The honest conclusion from that experiment is not that we need to accelerate the energy transition on the basis of some presumed ‘climate crisis’. It is that the world’s dependence on oil, gas and coal is profound, structural and not going anywhere soon. A world-class research institution ought to be able to say so without the ‘energy transition’ hedge.
This article was first published in the Daily Sceptic [https://dailysceptic.org/2026/06/21/the-oxford-institute-letting-climate-ideology-bias-its-research/]
