The global dependence on oil sourced from unstable regions is not merely an economic issue, but a strategic vulnerability of the global economy.
For decades, the world’s energy system rested on one basic assumption: that the flow of oil from the Persian Gulf must continue uninterrupted. When more than a quarter of global seaborne oil trade passes through the Strait of Hormuz, a single maritime route effectively becomes a bottleneck for the world economy.
Any regional escalation is quickly translated into higher energy prices, higher insurance costs, and inflationary pressures across many economies.
For years, this dependence appeared unavoidable. In recent years, however, a profound shift has been taking place, a shift driven not by politics, but by technology. The global energy system is undergoing a gradual transformation, in which large portions of oil’s traditional uses are being replaced by electricity, energy storage, and alternative energy sources.
It is important to understand that this transition is not taking place through one single technology replacing oil. It is a broad, multidimensional process in which different technologies are simultaneously reducing different components of oil demand.
Each operates on a different link in the energy system’s value chain, and the cumulative result is a big structural change.
Energy revolution evidenced in transportation
The first field in which the revolution is already visible is transportation.
For more than a century, global transportation relied almost entirely on internal combustion engines. But the combination of advances in battery technology and a dramatic decline in costs is gradually changing the economics of the transportation sector.
The electric vehicle is no longer an experimental product, but a mass-produced industrial platform. In Europe, for example, in 2025, sales of electric vehicles surpassed sales of gasoline-powered cars for the first time.
One Israeli example of this revolution is StoreDot, which develops batteries with ultra-fast charging capability. The technology makes it possible to charge a significant driving range in just a few minutes.
As charging times are substantially reduced, one of the main barriers to the broad adoption of electric vehicles disappears, and the shift to electricity becomes not only an environmental choice, but also an economic and operational decision.
The transportation revolution is not taking place only inside the battery, but also in the infrastructure itself. Israel’s Electreon is developing wireless charging technology embedded in roads, allowing vehicles to charge while driving through a magnetic field created beneath the road surface.
Initial projects are already operating in Europe and the United States. Broad deployment of such technology could fundamentally reshape the design of the electric transportation system: less dependence on large batteries and charging stations and more reliance on smart infrastructure that charges vehicles in motion.
But the transition to electricity also creates a new challenge: strain on the power grid. Fast-charging stations require very high power output, and local grids are not always prepared for that demand.
This is where energy storage and grid management technologies come into play. Israel’s ZOOZ Power is developing a kinetic storage system based on a flywheel, which stores energy mechanically and releases it during peak demand. Solutions like these make it possible to operate charging stations even in areas where the electricity infrastructure is limited, without the need for costly grid upgrades.
Another significant change is taking place in industry. A large share of global fossil fuel consumption is linked not to transportation, but to the production of process heat, steam, and high-temperature heat.
Israel’s Brenmiller Energy has developed an industrial thermal storage system that makes it possible to generate heat using electricity, store it, and use it on demand in manufacturing processes. Such systems can replace boilers based on fuel oil or gas, reducing fossil fuel use even in energy-intensive sectors.
Other Israeli companies in this space include TIGI Solar, which develops solar thermal collectors for producing high-temperature heat; Nostromo Energy, which manufactures advanced thermal energy storage systems in ice for cooling commercial buildings; and ZutaCore, which develops direct liquid cooling technology for chips in server farms, among others.
The most complex challenge concerns uses in which electricity alone is not sufficient, including shipping, aviation, and parts of heavy industry, which require especially high energy density. Here, solutions based on green hydrogen and its derivatives come into play. Israeli companies H2Pro and HydroLite are developing advanced technologies for producing green hydrogen at high efficiency.
QD-SOL produces green hydrogen directly from sunlight and water, and Purammon is developing electrolyzers for wastewater treatment, enabling green hydrogen production while purifying water. Such hydrogen can be used as industrial fuel, converted into ammonia for maritime transportation, or serve as the basis for producing synthetic fuels.
Another source of energy is the conversion of waste into energy. BOSON Energy has developed gasification technology that makes it possible to convert non-recyclable waste into a new energy source near the point of use. The company has been selected as a strategic partner of NATO and is establishing demonstration facilities in Europe.
Another example of Israel’s ability to influence global energy infrastructure is SolarEdge, which developed inverter and optimization technologies for solar systems at the individual panel level. This technology increases the efficiency and economic viability of distributed electricity generation, and provides the foundation for the electrification of transportation and industry. As solar systems spread on a broader scale, dependence on fossil fuels across the entire energy system declines.
A complementary link in the value chain is the management of transmission grids and electricity distribution. Israel’s mPrest develops software systems for managing complex power grids and orchestrating distributed energy resources, solar, storage, and electric vehicle charging. As the energy system becomes more decentralized, a “digital brain” is needed to manage in real time the flow between sources of production, storage, and consumption. Such solutions have already been selected to manage major electricity systems around the world.
When all these technologies are brought together, a clear picture emerges: transportation is being electrified, industry is gradually moving to electricity-based heat, and the sectors in which electricity is not sufficient are receiving alternatives in the form of hydrogen and advanced fuels. Demand for oil is not disappearing overnight, but its structure is changing in a fundamental way.
Beyond that, a deep geopolitical shift is taking place. The new energy system is more decentralized, relying on local production, storage, and smart infrastructure, rather than on a limited number of production regions. As this system expands, the economic leverage of oil-exporting countries over the global economy also declines.
Israel has a particular interest in this process. Beyond climate considerations, this is a tremendous industrial opportunity. Energy technologies are among the fastest-growing sectors in the world, and are expected to create markets worth trillions of dollars in the coming decades.
The role of innovation policy is to identify these structural changes early and help local technologies cross the critical stage between research and development and industrial deployment. In the energy sector, where large-scale demonstrations, tailored regulation, and complex commercialization infrastructure are required, public policy plays a decisive role.
Ultimately, energy is one of the central sources of power in the global economy. For decades, oil was its foundation. But the technological revolution now underway is beginning to change the rules of the game. The day after dependence on oil is no longer a theoretical scenario, it is already being built, through technologies that are gradually yet consistently replacing oil’s place in the global energy system.
The writer is the CEO of the Israel Innovation Authority.