Why $100 Oil is Unlikely to Quash Clean Energy Assets This Time

With the Gulf conflict once again pushing crude past US$100 a barrel, investors who lived through the "Sustainable Winter" of 2021-22 could be forgiven for bracing for a repeat. Back then, the emerging energy crisis, compounded by the Russia-Ukraine conflict, dealt a crushing blow to sustainable investors.

Clean energy markets, which had handily outperformed on the back of the US Inflation Reduction Act, entered a multi-year reversal as soaring inflation and subsequent higher interest rates suddenly made project financing prohibitively expensive.

The muscle memory is still there, probably fuelled by some anxiety about central banks’ responses to the projected surge in inflation. So far, the data tells a different story, thanks to AI and its insatiable appetite for power.

Clean energy stocks holding up

As of 31 March, the oil and gas complex has led performance and is up around 38% year-to-date, while the MSCI World is down 6.3% as markets rotated into the so-called HALO universe of heavy asset, low obsolescence stocks.

But clean energy (as measured by the iShares Global Clean Energy ETF index [ICLN]) has held up, still returning roughly 4% and outperforming broader markets. It is a powerful indicator of the dependency that hyperscalers and data centres now have on renewable energy for near-term power generation.

Figure 1. ICLN versus MSCI World versus MSCI Oil & Gas Integrated

Source: Bloomberg, as of 31 March 2026.

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The hyperscaler demand floor

What has changed since 2021 is the structure of demand for renewable energy.

Amazon Web Services, Microsoft Azure and Google Cloud are now some of the largest power consumers globally, driven by the exponential growth of AI workloads and data centre expansion.

Figure 2 shows how Big Tech names represented 49% of all global clean energy buying activity in 2025. But unlike traditional industrial demand, this load is protected by long-term renewable power purchase agreements, meaning these buyers are less likely to walk away when oil prices spike.

Figure 2. Top global corporate PPA clean energy buyers in 2025

Source: Bloomberg NEF. Note: Chart shows only offsite corporate power purchase agreements (PPAs) that are publicly disclosed or submitted directly to BNEF by market participants and meet a set of minimum requirements. Only PPAs with contract durations greater than one year are included. Data as of December 2025

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This creates a persistent bid for renewable generation capacity that did not exist in prior cycles. It helps explain why clean energy equities have held up despite tighter financial conditions. The geographic concentration of data centres has also elevated energy security concerns at a regional level, reinforcing the need for stable, domestically generated power.

The energy trilemma

A well-known maxim in energy follows that the key to high prices is high prices. One of the outstanding questions in this energy crisis is whether high prices will drive expansion in investment in fossil fuels, or diversification away from them into alternatives. In other words, do high prices cut both ways?

The "energy trilemma" offers a useful lens here. Governments have long balanced three competing priorities in energy policy: decarbonisation, energy security and affordability. Over the past decade, decarbonisation led the agenda under net zero commitments. That shifted to affordability as energy bills surged. Now, the Gulf conflict has moved energy security to the top.

Perhaps most interesting in this evolution is the idea that energy security and energy transition go hand in hand. Renewables are no longer purely a decarbonisation tool. They are increasingly viewed as a strategic asset that may support grid reliability and sovereign energy independence.

Three lessons from the 1970s

The twin energy crises of the 1970s offer three lessons that may apply today:

First, energy security is likely to define government policy for the foreseeable future. Security of supply and energy transition now go hand in hand.

Second, high energy prices drive behaviour change and supply responses. Just as smaller cars and energy efficiency were products of the 1970s crises, the twin crises of the 2020s will shape consumer behaviour and investment in alternative energy supply.

Third, energy shocks create short-term disruption and long-term structural change. Continued renewable investment, expansion in nuclear power generation, greater attention to strategic reserves, and new efficiency standards could reshape the energy system.

Parting thoughts

To be sure, the argument for the resilience of clean energy can both be structurally right and cyclically fragile. The reality is that financing conditions will always dominate clean energy economics, and no amount of hyperscaler demand will ever fully immunise the clean energy sector’s sensitivity to rates.

At the same time, AI demand remains highly concentrated so any delays or bottlenecks may naturally weaken the demand pull-through. In short, it doesn’t eliminate the likelihood of a 2021-2022 replay, but it does suggest it may be shallower and shorter in duration.

All data Bloomberg, unless otherwise stated.

Author: Jason Mitchell, CIO, Responsible Investment, Man Group.