The closure of the Strait of Hormuz is reshaping the economics and policies of clean transport fuels, turning what was largely a decarbonization effort into a matter of energy security for governments and industries alike, Rystad Energy said in a whitepaper on Friday.
Rystad analysts said the disruption to strategic waterways is accelerating investment and policy support for biofuels, sustainable aviation fuel, and other low-carbon alternatives across shipping, aviation, and road transport.
"The Hormuz crisis proves that energy security and decarbonization are not parallel tracks - they are converging, and that strengthens the case for domestically produced clean fuels in every transport sector," Thomas Heerschap, vice president for bioenergy at Rystad Energy, said.
SAF in aviation is entering what Rystad described as a "policy-driven growth phase," supported by mandates in Europe, Asia and the Americas.
Global SAF demand is projected to rise to about 1.2 million barrels per day by 2040, with the strongest growth expected in Asia as air travel expands and governments tighten emissions targets.
Europe's ReFuelEU Aviation regulation requires a 2% SAF blend from 2025, rising to 6% by 2030, while Japan is targeting 10% SAF usage by the end of the decade.
Singapore, however, delayed its SAF mandate to 2027 following high jet fuel prices and supply disruptions amid the ongoing Middle East conflict.
Rystad said the SAF premium over conventional jet fuel had narrowed sharply since late 2025 as crude prices surged following the escalation of tensions in the Middle East.
The premium fell to about $1,040 per ton after peaking near $2,150 per ton in late 2025 as higher oil prices boosted the cost of conventional Jet A fuel faster than SAF prices rose.
However, despite the narrowing premium, airlines remain under pressure from higher overall fuel bills, leading many carriers to limit SAF purchases to mandated volumes and delay voluntary procurement commitments.
The energy crisis is also reinforcing the appeal of biodiesel, bio-LNG and biomethanol as alternatives to conventional bunker fuel in maritime shipping, even as regulatory uncertainty persists around the International Maritime Organization's net-zero framework.
Bio-LNG was identified as one of the most attractive near-term compliance pathways under Europe's FuelEU Maritime regulation, although uptake remains constrained by vessel readiness and limited fuel availability.
Meanwhile, Rystad said emerging economies are increasingly using road-transport biofuel mandates to reduce dependence on imported crude and to shield their currencies from oil price shocks.
India, Indonesia and Brazil could collectively avoid about $28 billion in petroleum imports in 2026 through existing ethanol and biodiesel blending programs, with savings potentially rising above $33 billion by 2028 under higher-blend scenarios.
Indonesia's B40 biodiesel mandate alone could reduce diesel import costs by an estimated $13.5 billion this year under a $95-per-barrel Brent scenario, while India's E20 ethanol program could generate $6.4 billion in avoided crude imports.
Malaysia, Vietnam and the Philippines are also expanding blending mandates as governments across Asia increasingly view biofuels as part of broader energy security strategies.
However, Rystad said the biggest risk to the sector was regulatory uncertainty, which was delaying investment decisions just as geopolitical tensions and decarbonization goals were reinforcing the need for alternative fuel capacity.