Note: This analysis reflects the Israel-Iran ceasefire announced on June 23, 2025. While the immediate crisis has eased, the insights highlight ongoing opportunities for biofuels in a volatile energy market.
The recent conflict between Israel and Iran, culminating in a fragile ceasefire brokered by US President Donald Trump, has underscored the fragility of global energy markets.
Starting June 12, 2025, Israel launched airstrikes on Iranian nuclear facilities, military sites, and energy infrastructure, including the South Pars gas field, prompting Iran’s retaliatory missile strikes on Israeli targets, such as an oil refinery in Haifa.
Though the ceasefire has eased immediate threats, the episode highlights the risks of over-reliance on volatile oil routes like the Strait of Hormuz, through which 20% of the world’s seaborne oil flows. This moment of relative calm offers a chance to reassess energy strategies, with biofuels emerging as a critical tool for resilience and decarbonization.
The Israel-Iran ceasefire, announced on June 23, 2025, has averted a full-blown energy crisis. However, what’s happening serves as a wake-up call for governments and corporations.
History shows that geopolitical shocks—whether the 1970s oil embargo or Russia’s 2022 invasion of Ukraine—often trigger lasting energy policy shifts. The recent conflict, though de-escalated, highlights the vulnerability of relying on a few oil supply routes. Biofuels, as a decarbonization tool and a means of energy independence, are well-positioned to gain traction in this context.
The ceasefire followed intense fighting, with oil prices spiking to $81.40 per barrel amid fears Iran might block the Strait of Hormuz. Post-ceasefire, Brent crude fell 6% to around $67 per barrel, reflecting reduced supply disruption risks. Yet, the truce’s fragility—marked by reported violations—underscores ongoing risks.
Even before the Israel-Iran conflict, major oil companies were investing in biofuels, signaling their role in future energy markets. According to Reuters, more than 40 biofuel projects are expected to come online by 2030, primarily focused on renewable diesel and sustainable aviation fuel (SAF). These investments reflect a growing awareness that diversifying energy portfolios benefits both the environment and business resilience in an uncertain economic climate. This diversification is also being hardwired into policy.
In the U.S., the expansive 2026–2027 Renewable Volume Obligations (RVOs) cement energy dominance as a strategic goal, favoring U.S. feedstocks for U.S. mandates (Table 1).
Table 1. U.S. Renewable Volume Obligations (RVO) for 2026–2027 highlight a strategic policy shift toward energy dominance through expanded domestic biofuel use. Source: Prima CarbonZero, ResourceWise (2025)
This reinforces domestic energy security while boosting prices for key agricultural inputs like CBOT soybean oil.
Chart 1. Futures trends show soybean oil increasing in value relative to fossil heating oil, signaling a policy-driven shift toward domestic feedstock utilization. Source: Prima CarbonZero, ResourceWise (2025)
Across the Atlantic, Europe is following a similar path. The latest provisions under RED III mandate higher blending targets while incentivizing domestic feedstock supply, underscoring a dual push for decarbonization and regional energy resilience.
Meanwhile, the growing mismatch between declining fossil fuel prices and their rising environmental cost—most notably from CO2 emissions—will continue to drive institutional, governmental, and corporate demand toward renewables. In this context, the market will require every available ounce of biogenic hydrocarbons to bridge the widening gap between renewable fuel demand and limited feedstock supply.
Despite their promise, biofuels are not entirely free from the pressures of the volatile oil industry. Many of today’s most scalable biofuels are “drop-in” solutions—fuels engineered to work seamlessly with existing engines, pipelines, and distribution networks. While this compatibility is a selling point, it also means biofuels are vulnerable to the same logistical bottlenecks that affect petroleum.
For instance, disruptions in hydrogen supply (often derived from fossil sources) can stall renewable diesel production. Similarly, shipping constraints or refinery outages, like those caused by strikes on Iran’s South Pars field or Israel’s Haifa refinery, can ripple through the biofuel value chain, affecting everything from raw material procurement to final distribution. The ceasefire reduces immediate pressure on oil-linked supply chains, but the biofuels sector must still build resilience to overcome these dependencies.
Another limiting factor is feedstock availability. The surge in demand for biofuels has strained global supplies of desirable inputs, such as used cooking oils and animal fats, prized for their low carbon intensity and compatibility with existing production pathways. The International Energy Agency has warned of a potential “feedstock crunch” between 2022 and 2027, particularly as more countries ramp up biofuel blending mandates. This widening gap between demand and feedstock supply is already visible in current market projections.
Chart 2. U.S. biofuel demand is projected to outpace the current availability of waste and virgin oil feedstocks, highlighting the urgency of developing scalable next-generation alternatives. Source: Prima CarbonZero, ResourceWise (2025)
The ceasefire underscores the need for feedstock innovation to ensure biofuels can scale without relying on volatile oil-linked supply chains. Breakthroughs in next-generation feedstocks—like lignocellulosic biomass or algae-based oils—will be key to avoiding a projected feedstock crunch by 2027.
The control of oil routes and supplies remains a driving force for global economic stability. If major economies rely on petroleum for aviation, shipping, and freight, geopolitical events will continue to have outsized impacts. The ceasefire mitigates immediate risks but does not eliminate the need for alternatives.
In fact, fossil fuel oversupply in the wake of non-disruptive conflict response reveals a different vulnerability: low-cost oil that appears attractive but conceals high long-term costs in the form of emissions and climate risks. As carbon pricing schemes and public scrutiny expand, demand for low-carbon fuel alternatives will continue to rise—driven by policy, industry pressure, and market expectations.
Biofuels, with their potential to decentralize and decarbonize fuel production, are a critical part of this equation. But to succeed, they must overcome feedstock constraints and infrastructure dependencies. The market is approaching a pivotal phase where the elasticity of biogenic hydrocarbon supply—whether from waste oils, wood pellets, or emerging sources like biochar—will determine how fast renewable fuels can scale.
ResourceWise is a leading market intelligence provider and specialist in biogenic carbon resources. We deliver critical data on supply chains, pricing, and elasticities for energy mitigation solutions (e.g., wood pellets, waste oils, biofuels) and carbon dioxide removal (e.g., biogenic CO2, biochar). As markets transition to new stages of development, investment, and trade, our insights empower confident decision-making in a volatile, carbon-constrained world.
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