Trading oil for electrons fails to establish energy security for nation-states if it trades one dependency for another.
The US-Israeli war in Iran and its subsequent fallout with the blockage of the Strait of Hormuz provide a poignant reminder of how exposed the global economy remains to imported fuels and oil.
Representing over 20%of global petrol and LNG trade volume according to the US Energy Information Administration,the Strait of Hormuz serves as one of the world’s most critical oil transit chokepoints.And despite the fact that over 80%of Hormuz crude is destined for Asian countries,the impact of halted trade can be felt globally,with crude oil prices reaching$106/barrel at the time of writing.
Batteries,and their ability to decouple energy production and consumption,serve as fundamental infrastructure to reduce dependence on imported fuels and support a nation’s pursuit of energy sovereignty.
Batteries are indiscriminate in their input source:an electron is an electron.
Accordingly,J.P.Morgan has started a$1.5 trillion,10-year initiative explicitly listing“nuclear energy,battery storage,and distributed power systems”as priorities within its energy independence and resilience domain.
Columbia this past month,despite being a major coal producer,hosted representatives from over 50 countries in a two-day high-level conference to coordinate efforts to cut down fossil fuel production and decarbonise energy production.
Global markets also responded:CATL and BYD gained nearly 20%in March in the wake of the conflict and strong fundamentals.And it’s in the country that houses these two titans in the battery industry where we observe the benefits in investing in battery technology.
According to the state-backed energy company CNPC's research institute,China's refined oil consumption peaked in 2023 at 399 million metric tons(7.98 mb/d);gasoline peaked at about 3.7 mb/d by road gasoline/diesel displacement through EV deployment.
Although much of the oil that flows through the Strait of Hormuz is disproportionately destined for China,the nation’s runway extends longer than that of most other nations.
The more consequential battery-security story,however,lies within grid-scale storage.
Battery Energy Storage Systems(BESS)allows power systems to absorb more domestic generation,firm variable renewables,manage peaks,support reliability,and reduce reliance on imported fuel generation.
China leads BESS deployment,with over 130 GWh of storage deployed in 2025 alone.The US follows up at over 50 GWh,and dwarfs the next largest national deployment by three times.
More broadly,BESS systems today are already replacing gas peakers globally in the US(CAISO),Australia(AEMO),and Great Britain,with documented gas Resource Adequacy decreases or project cancellations.And as opposed to oil production and distribution,power generation and distribution remain local when batteries are co-located with renewables.
Isshu Kikuma from BNEF perhaps stated it best:“Renewables and batteries are capital goods,meaning import dependence is lower than for fossil fuels,which are consumables.Imports are typically needed only once to build renewable energy and storage projects,rather than continuously for fuel supply.”
The ability to generate and distribute power within one’s own borders provides a clear path to a nation’s energy sovereignty.
Kikuma’s statement simultaneously highlights the clear value proposition of energy storage as well as the underlying,unavoidable truth in its weakness at present.
If ex-China markets scale BESS while relying heavily on China-centered supply chains,they may reduce oil exposure while creating a new concentration risk.
China produced 86%of all batteries made in 2025,including almost 100%of LFP-based batteries,the product of choice in over 90%of BESS systems deployed last year.
Furthermore,in the upstream and midstream supply chain,China today produces 67%of refined Lithium salts,97%of Lithium Iron Phosphate CAM(LFP CAM),and 93%of Graphite Anode Active Materials(AAM).
Thus,even if production of batteries were onshored in ex-China countries,the concentration risk still remains.
Geopolitical conflicts have already demonstrated their ability to disrupt the battery supply chain:China’s export control laws on battery-grade graphite in 2023 as well as LFP material&battery production equipment last October suggest that even this import path’s exposure risk could be similar to that of oil from Iran if global battery deployment continues without careful consideration.
And thus,for industry leaders,the conclusion is pragmatic yet urgent:the Strait of Hormuz oil crisis reiterates how fragile energy security can be given a singular,30-mile wide physical chokepoint of oil trade.
Batteries,in turn,are emerging as a core pillar of energy security by enabling abundant,localised,and recurring energy production and distribution.However,the strategic lesson cannot conclude at'deploy batteries at any cost'.
Procurement,financing,manufacturing strategy,and project development must account for battery supply-chain resilience to decouple from today’s single-sourced realities,else nations risk a similar flavour of supply-chain disruption familiar to the disruptions today with oil.
