14 March 2026 8:45 pm
MENA Region’s Rapid Energy Transition Explained

MENA Region’s Rapid Energy Transition Explained

Mar 6, 2026

Wind turbines against a dramatic desert landscape, promoting sustainable energy solutions. by Ricky Esquivel via pexels

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MENA region’s rapid energy transition

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Author
Dr. Majid Rafizadeh

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The Middle East is undergoing a significant transition toward renewable energy (AP photo)
The Middle East is undergoing a significant transition toward renewable energy (AP photo)

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ARAB NEWS Short Url :  https://arab.news/4f4yg

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The Middle East and North Africa region is going through a rapid energy transition and has made significant advances when it comes to renewables.

Several factors have driven this rapid shift, including economic diversification goals, climate pressures and domestic energy demand. In addition, there has been a decline in the cost of clean technologies and governments across the region have been investing heavily in renewables like solar and wind and related infrastructure.

The installed renewable energy capacity in MENA is already about 30 gigawatts. And projections show an expected increase to more than 130 GW by 2030.

Although this shows that the region’s renewable energy capacity is projected to expand more than fourfold by the end of the decade, the transformation is not uniform. While some MENA countries are emerging as global clean energy leaders, others remain constrained. This is due to issues such as inefficient infrastructure, political instability and financial limitations.

However, the trajectory of renewable adoption will significantly influence the future of the region when it comes to economic stability, environmental sustainability and long-term prosperity.

While some MENA countries are emerging as global clean energy leaders, others remain constrained

Dr. Majid Rafizadeh

Several MENA countries have positioned themselves at the forefront of the energy transition. They have done so through several paths, including ambitious national strategies, large-scale projects and supportive regulatory frameworks.

Gulf states — particularly Saudi Arabia, the UAE and Qatar — have invested significantly to build some of the world’s largest solar installations. These countries are not only pursuing renewables and transitioning rapidly to reduce emissions, but also to diversify their economies.

Solar energy stands at the top of the region’s transition due to the fact it has exceptional solar irradiance. Regional solar capacity alone could exceed 180 GW by 2030, with more than 80 percent of growth concentrated in Saudi Arabia, the UAE and Egypt. The Gulf states’ long-term strategies — such as meeting a substantial share of their electricity demand through clean sources — shows how energy transition policies are integrated into their broader economic visions.

When it comes to North Africa, the likes of Morocco and Egypt have also made significant progress and emerged as pioneers. Morocco has invested heavily in both solar and wind infrastructure and it aims to produce more than half its electricity from renewables by 2030. Egypt is pursuing a similar target.

Some of the advantages these North African countries have are their natural resources, their proximity to European markets and their adoption of policy frameworks that are designed to attract foreign investment.

There are multiple reasons that some MENA states are accelerating their adoption of renewable energy at such a rapid pace. Firstly, energy demand is rising rapidly due to population growth, urbanization and industrial expansion. Renewable energy offers a cost-effective solution.

Countries that successfully diversify their energy systems could gain influence as exporters of clean energy and technology

Dr. Majid Rafizadeh

Secondly, economic diversification strategies — such as Saudi Arabia’s Vision 2030 — seek to reduce their dependence on oil by developing new industries, including green hydrogen and clean technology manufacturing.

Thirdly, falling costs due to technological advances have transformed the renewables sector and made the transition even more important and economically sound. For example, utility-scale solar projects in the region now achieve some of the lowest electricity prices globally. This makes them very competitive with fossil fuels.

Finally, climate vulnerability is increasing. Many MENA countries face extreme heat, water scarcity and desertification; this strengthens the case for the transition. Reduced emissions will help limit extreme heat and water stress.

However, in spite of this impressive progress, several countries in the region continue to lag. This is related to several underlying factors, such as bureaucratic inefficiencies, prolonged conflicts or unrest, weak governance and an inability to attract long-term investment.

Financing barriers are another major obstacle, as renewable projects demand substantial capital. This is why international climate finance and development banks should provide more support when it comes to funding.

These countries can implement comprehensive policy reforms and strategic investments to provide long-term certainty for investors. In addition, international and regional cooperation will play a vital role. For example, partnerships with European and Asian markets can facilitate technology transfer, financing and export opportunities for this transition. Also, the diversification strategies of these nations should incorporate renewables into their broader economic planning.

Geopolitically speaking, the shift toward renewables will likely reshape regional power dynamics. Countries that successfully diversify their energy systems could gain influence as exporters of clean energy and technology. But those countries that lag will risk economic deterioration, isolation and marginalization. They will also risk environmental crises in a region that is among the world’s most strategically significant.

In a nutshell, the region is undergoing a significant and rapid transition toward renewable energy, propelled by technological advances, economic necessity and environmental pressures. But progress remains uneven. Leading countries have demonstrated that decisive policies, investment and long-term planning can transform energy systems.

Ultimately, the region’s economic stability and environmental sustainability will come down to how decisively it embraces the clean energy transition. If the lagging countries join and accelerate the current momentum, MENA could emerge as a global leader in renewable energy.

  • Dr. Majid Rafizadeh is a Harvard-educated Iranian-American political scientist. X: @Dr_Rafizadeh

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The Strikes on Iran Show Why Quitting Oil Matters

The Strikes on Iran Show Why Quitting Oil Matters

Mar 5, 2026

Anton Petrus/Getty

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The strikes on Iran show why quitting oil is more important than ever

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Hussein Dia, Swinburne University of Technology

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As Israel and the United States strike Iran, global oil markets are on edge.

Oil prices have begun rising even before any disruption to supply. Oil traders are factoring in the possibility the Strait of Hormuz might close.

Roughly 20% of the world’s traded oil passes through this narrow waterway between Iran to the north and Oman and the United Arab Emirates to the south. One oil tanker has been bombed and traffic has all but halted. In global energy markets, the mere threat of interruption can push prices higher.

Oil isn’t like most commodities. Control of the energy-dense fuel shapes geopolitics. Three-quarters of the world’s population live in countries dependent on oil imports for cars, trucks and other uses. Controlling the flow of oil and, increasingly, gas, has long been used as leverage, from the oil shocks of the 1970s to Russia cutting European gas supplies in 2022.

Any serious disruption to tanker traffic in the Gulf would send shockwaves through global oil markets and threaten economic stability. Long queues have already been reported in Australia as motorists vie to fill up before possible price spikes.

As international tensions increase, nations from Cuba to Ukraine to Ethiopia are accelerating plans to reduce their oil dependence and boost energy security.

Half a century of oil leverage

The power of oil became obvious during the 1973 oil embargo, when major Middle East oil producers slashed supply in a bid to reshape US foreign policy. Prices quadrupled, economies stalled and energy security became a central political issue almost overnight. The Organization of the Petroleum Exporting Countries have since coordinated supply to drive up prices.

Today, the mechanisms of control look different but the power created by oil dependence remains.

Even before US military action, sanctions on major producers such as Iran and Venezuela have cut supply and reshaped trade flows.

Current tensions near chokepoints such as the Strait of Hormuz introduce risk premiums into prices.

Oil markets are forward-looking, meaning prices reflect not only current supply and demand but expectations of what might happen next.

The strikes on Iran have seen prices of Brent crude – the global benchmark – trading around US$76 (A$107) per barrel, up from roughly US$68 (A$96) a few weeks earlier. Because prices are global, political instability anywhere can have economic consequences everywhere.

Who’s reducing dependence on oil?

In 2015, India blocked Nepal’s oil imports, triggering chaos. In response, authorities encouraged the very rapid growth of electric vehicles. Oil imports have begun to fall.

More recently, the Russia–Ukraine war and US strikes on Venezuela and Iran have brought new focus on reducing oil imports and bolstering domestic energy security.

In oil-dependent Cuba, US pressure has slashed the supply of oil. Blackouts are common and cars stay put. In response, authorities and businesses are importing 34 times as many Chinese solar panels as they did a year ago.

It’s not ideology driving this shift – it’s necessity. Electric vehicle imports, too, are soaring. “Cuba may experience the fastest energy transition in the world,” a Cuban economist told The Economist.

Why renewables change the equation

Unlike oil, solar panels and wind turbines can avoid being shipped through maritime chokepoints such as the Strait of Hormuz. Renewables are not traded in the same globally centralised way. Power is generated locally and increasingly across many smaller sites.

Russia has long targeted Ukraine’s energy infrastructure and power plants during the war. In response, Ukraine is ramping up renewables as fast as possible, as decentralised power generation is much harder to destroy. As a Ukrainian energy expert told Yale360, a single missile “could take out” a coal power station, while a wind farm would require 40 missiles.

Decentralised power is more resilient, meaning damage to one farm won’t collapse the grid.

Resilience through electric transport

Electrification of transport is a key plank of these new approaches to energy security.

Electric vehicles powered by locally-produced electricity reduce exposure to global oil markets. This thinking is visible in Ethiopia’s decision to ban new internal combustion cars.

China imports most of its oil – much of it from Iran. Beijing has been accelerating its rapid shift to electric vehicles. Last year, EVs made up 50% of new cars in China and 12% of the total fleet. China is increasingly using oil to make plastics, not for transport. Last year’s uptick in imports was due to stockpiling of huge volumes amid global uncertainty.

Australia’s exposure

Australia imports the vast majority of its refined fuels. We would have about a month’s worth of petrol before we ran out.

If wars drive up oil prices, pain at the petrol pump will flow through to freight costs, food prices and inflation.

While the EV shift is accelerating, Australia is slow by global standards. Even as electricity rapidly goes green, transport remains overwhelmingly dependent on foreign oil. That leaves Australia exposed.

Energy policy is security policy

Renewables do not eliminate geopolitical risk. Power grids face cyber threats. Critical mineral supply chains introduce new dependencies – and much of today’s solar panel, battery and EV manufacturing is concentrated in China.

But there is a clear structural difference. Decentralised systems are harder to manipulate through supply chokepoints. Solar panels, once installed, generate energy locally. The vulnerability shifts from ongoing fuel imports to upfront manufacturing dependence.

Oil has shaped global politics for decades because it’s transportable, globally traded and only a few countries have large reserves.

Reducing oil dependence is often framed as climate policy. But it is also vital to energy security and national security. Cutting oil use boosts resilience to shocks and reduces the leverage of other nations.

The Iran crisis may not lead to sustained price spikes. Supply may adjust. Markets may stabilise. But leaders will be rethinking the wisdom of exposure to globally traded oil in a volatile world.The Conversation

Hussein Dia, Professor of Transport Technology and Sustainability, Swinburne University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Conversation*


 

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How Buildings Can Start Solving Energy Security Today

How Buildings Can Start Solving Energy Security Today

Mar 4, 2026

power plant, electricity provider, energy company, factory, industrial building by Gyura88 via pixabay

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How buildings can start solving energy security as power demands surge

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WEF 3 March 2026
A view of skyscrapers from the ground: Efficiency retrofits help improve energy security for businesses in the long term

Guy Grainger, Global Head, Sustainability Services, JLL

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This article is part of:Centre for Nature and Climate
  • The traditional role of buildings as energy consumers is changing amid rising supply disruptions, surging demand, and more volatile pricing.
  • Retrofitting measures and artificial intelligence-driven building management systems can improve energy efficiency and lead to significant cost savings while supporting longer-term resilience.
  • Distributed energy technologies, such as on-site solar, battery storage and microgrids, enable buildings to improve resilience, reduce costs and even supply power back to the grid.

Energy security and its implications for business as usual have landed at the feet of executives. The energy distribution model spanning the built environment for more than a century is breaking down.

Traditionally, energy has flowed in one set direction – from power plants through transmission lines to the buildings where we work and live. Within this linear model, commercial and residential buildings are largely passive energy consumers, quietly drawing power and paying bills to keep the lights on.

That era is ending. Cracks are appearing in energy systems worldwide and in some places, the lights are literally starting to flicker. After decades of relative stability, energy demand is now soaring at an unprecedented pace as more power-hungry data centres come online and manufacturing becomes increasingly automated and electricity-intensive.

Energy upheaval is a growing business challenge, as power volatility introduces new risks to operations and budgets.

Growing energy appetite

Electrification is transforming everything from delivery trucks to building operations. Take electric vehicle (EV) charging: as logistics fleets go electric and more EVs charge out-of-home, unmanaged charging infrastructure can more than triple a site’s peak power demand.

Energy infrastructure built for yesterday’s lighter loads is buckling under this pressure. Upgrading transmission lines and expanding utility-scale grid capacity requires significant investment while facing multi-year equipment delays that have become the norm rather than the exception across major markets.

Meanwhile, clean energy is rolling out at a record pace, with lower costs and faster deployment times driving uptake even as political support wavers in some regions. However, this buildout varies geographically, creating fundamental mismatches between where new renewable power comes online and where electricity demand is highest.

The result: a more volatile and expensive energy landscape. Electricity prices across major economies have surged in recent years, ending a long period of relative predictability that many businesses had come to rely on.

JLL research highlights that across six major markets, industrial power prices rose by approximately 18% between 2019 and 2024, compared with just 4% growth in the preceding five-year period.

Real estate feels the strain

This energy upheaval is a growing business challenge, as power volatility introduces new risks to operations and budgets, especially for mission-critical facilities such as research laboratories, manufacturing plants and data centres. According to Prologis’ 2026 Supply Chain Outlook, nearly 90% of companies experienced some form of energy disruption in the past year.

Against this backdrop, many organizations are fundamentally rethinking their energy strategies across their real estate portfolios. As reliable, clean and affordable power becomes a business imperative, they’re asking how they can better manage volatile energy costs in the short-term and improve their energy security in the longer-term.

One key step in any plan is to reduce energy use through measures such as retrofitting. With energy accounting for roughly one-third of operating costs, JLL research estimates that light-to-medium retrofits can achieve 10-40% energy savings, with artificial intelligence solutions offering even greater savings.In a world where energy security can no longer be taken for granted, the coming years will see the emergence of a fundamentally different relationship between real estate and energy

Restoring energy back

However, true energy resilience requires a more fundamental rethinking of how buildings relate to power systems.

The solution involves flipping the traditional energy model on its head. Instead of buildings passively consuming energy from distant sources, they’re actively participating in generating, storing and managing power much closer to where it’s used.

Distributed energy technologies are making this transformation possible. On-site solar panels, sophisticated battery storage systems and building-scale microgrids are addressing reliability and cost volatility at the point of greatest stress.

As technology advances rapidly and costs continue to fall, these decentralized resources can maintain critical operations during grid outages, smooth the intermittency of renewable power and even provide energy back to the broader grid when needed.

The shift is already happening

Recent projects are already demonstrating this shift. The new Terminal One at New York’s John F. Kennedy International Airport is implementing one of the largest airport microgrids in the country, combining solar generation with advanced storage systems.

In California, Valley Children’s Healthcare is deploying one of the most sophisticated hospital microgrids to ensure clean, resilient power for life-critical medical operations.

Furthermore, as buildings get smarter, modern energy management platforms now integrate on-site generation, battery storage, building systems and EV charging infrastructure into a single intelligent control layer.

This allows facility operators to manage peak demand, shift loads to off-peak hours and prioritize lower-cost or lower-carbon power sources by the hour and by location, optimizing the entire energy system rather than managing components in isolation.

Addressing energy anxiety

In a world where energy security can no longer be taken for granted, the coming years will see the emergence of a fundamentally different relationship between real estate and energy.

According to Prologis, nine in 10 of survey respondents indicate they would pay a premium for sites with reliable energy infrastructure. Energy-efficient, electrified buildings powered by clean and reliable energy that offer improved operating performance are increasingly viewed as sources of competitive advantage.

It’s already a reality for the advanced manufacturing industry. In the key Silicon Valley market, our research reveals that buildings with high-power capabilities are commanding 49% higher rents on average compared to other leases signed in the past three years. Even against brand-new buildings i.e. those delivered within the last three years, high-power spaces still pull in 33% more rent.

In comparison, new construction alone has delivered an average rent premium of just 11% over the rest of the market.

The built environment is no longer at the edge of the energy transition but at the very centre. Buildings are one of the most flexible and underused tools we have for fixing energy challenges. Through retrofitting and resilience measures that are implementable today, we can create the energy security that modern businesses need.

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Housing has a data problem in global contexts

Housing has a data problem in global contexts

Mar 3, 2026

A vibrant illuminated globe display showcasing technological advancements at a science museum. by Denys Gromov via pexels

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Housing has a data problem

Brookings.education – March 2, 2026

The lack of basic tools to track and understand housing has resulted in a patchwork of individual programs and little clarity on whether any of them meet basic access and affordability needs. The promise of AI, which requires structured, standardized inputs, makes addressing this data-infrastructure gap more urgent.

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According to the latest United Nations estimates, 2.8 billion people worldwide lack access to adequate housing, while 318 million are homeless. Despite investing billions of dollars in solutions, governments and philanthropies have been unable to make a dent in the crisis.

An underappreciated reason for this is the lack of basic infrastructure to track and understand baseline questions concerning housing. Major data gaps mean we often don’t know which parcels of public land sit idle, how many units are vacant, and where development proposals stall. And without common definitions for fundamental terms, it becomes difficult to make comparisons across contexts – “affordable housing” means one thing in London, another in Lagos, and something else entirely in Los Angeles. Worse, the data that do exist are rarely accessible to policymakers and researchers.

In most cities, no single authority is responsible for tracking which public entity owns which parcel of land. Transit agencies, school districts, and planning departments each hold fragments of information that never connect. Zoning codes vary widely, not just between countries but also between neighboring municipalities.

This fragmentation produces bad policy. Without a full picture of the available resources and the factors that affect housing supply, policymakers cannot reliably identify effective interventions. As a result, a city might invest heavily in subsidized construction while sitting on publicly owned land that could be developed more cheaply. Governments set ambitious housing targets but are unable to track progress or remove bottlenecks, which effectively shields them from any real accountability. The result is a patchwork of individual programs and little clarity on whether any of them meet basic access and affordability needs.

Many hope that AI will finally crack the housing challenge. Machine-learning models can now reconcile disparate databases, detect underutilized land through satellite imagery, and simulate how policy changes might affect housing supply. But these tools require structured, standardized inputs. Realizing the technology’s potential therefore depends on the unglamorous work of data engineering. That makes building this infrastructure even more urgent.

For example, a pilot by the Urban Institute and the Legal Constructs Lab at Cornell University to automate National Zoning Atlas methodologies found that machine-learning models could not reliably interpret zoning documents, owing to inconsistent formatting, legal nuance, and local exceptions. Cities worldwide have experienced what practitioners call the “dashboard valley of death”: expensive visualization tools that fail because the underlying data infrastructure cannot sustain them.

The contrast with successful scientific infrastructure is instructive. The Human Genome Project helped transform the way scientists diagnose and treat disease in part by establishing the Bermuda Principles, which require participating laboratories to release DNA sequences within 24 hours. This ignited a wave of collaboration that later enabled breakthroughs like CRISPR and AlphaFold. After researchers shared SARS-CoV-2 genomes in early 2020, vaccines were developed at unprecedented speed.

A group of experts across housing policy, data infrastructure, and governance recently gathered as part of the 17 Rooms Initiative to discuss this problem. It was agreed that housing needs a similar mechanism: a “Home Genome Project” for standardizing and sharing housing data and AI models globally.

Such a mechanism will require, first, common taxonomies for parcels, zoning types, vacancy definitions, and development stages, designed for interoperability rather than vendor lock-in. Second, cities should share their models and datasets far and wide, enabling genuine comparison of what works across contexts. Third, standards and tools must be accompanied by a playbook for institutional capacity building, including data governance, cross-agency coordination, and the analytical capabilities needed to translate data into decisions.

To be sure, housing data presents challenges that genomics did not. DNA follows universal biological rules; by contrast, housing varies according to regulatory and political environments. While some variability is necessary to reflect local conditions, much more data can and should be standardized, which will require collaboration, not top-down mandates. Built for Zero has helped more than 150 communities make measurable progress on homelessness through shared data protocols and coordinated action, demonstrating that collective infrastructure can be built to address complex problems.

Philanthropists seeking to strengthen communities, policymakers pursuing housing targets, and technologists developing sector-specific AI models all face the same bottleneck: the data foundation does not exist. Building this infrastructure is not as exciting as funding an app or announcing a new initiative. But without it, allocating resources effectively and learning from experience is impossible. It is as though we were attempting precision medicine with medieval anatomy charts.

The Human Genome Project was a 13-year global undertaking that created an industry worth trillions of dollars. A comparable investment in housing data infrastructure could finally let us see what works, fund what scales, and unlock solutions we cannot yet imagine.

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The oil price surge is just one symptom today

The oil price surge is just one symptom today

Mar 3, 2026

A breathtaking view of an oil platform on the ocean at sunset, showcasing industrial beauty. by Zukiman Mohamad via pexels

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The oil price surge is just one symptom of a supply chain network that is not fit for this age of global tensions

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By Maryam Lotfi, Cardiff University

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Clare Louise Jackson/Shutterstock

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The escalating conflict between Iran, the US and Israel has taken a critical turn. The strait of Hormuz – one of the most important shipping routes for oil and gas – is facing significant disruption. The strait is the main route connecting Persian Gulf ports in Iran and some of the region’s other oil producers to the open ocean.

The strikes on Iran are already having tangible effects: energy flows are slowing, markets are reacting and supply chains are under pressure. This is not just a regional conflict – it is a global supply chain crisis unfolding in real time.

As an expert on supply chains, I am acutely aware of how central the strait is – not only for the stability of the region but also to the functioning of the global economy.

This narrow corridor is one of the world’s most critical chokepoints – around a fifth of the world’s oil passes through the strait daily. Its sudden disruption represents a “chokepoint failure” – a breakdown at a critical node that triggers cascading effects across global systems.

Tanker traffic has dropped sharply, with vessels waiting in surrounding waters as ship owners reassess the risks. Oil prices surged in response to the strikes and the threat to shipping routes. Analysts have warned that prices could climb significantly higher if the disruption persists.

But crucially, this reaction was not driven solely by actual shortages. Markets respond to uncertainty itself. The mere possibility that several million barrels per day could be disrupted is enough to push prices up, even before supply is properly hit. This reflects a broader feature of geopolitical risk: expectations and perceptions can be as economically powerful as material disruptions.

Because energy underpins almost every sector, these price increases transmit rapidly through supply chains. Higher fuel costs raise transportation expenses, increase production costs and ultimately feed into inflation across goods and services that eventually land with consumers.

The strategic importance of the Gulf states

The disruption is not confined to the strait. Instability across the wider Gulf region also affects the United Arab Emirates, as well as other strategically important energy producers and logistics hubs, such as Qatar, Kuwait and Saudi Arabia.

This dimension matters because the Gulf functions not only as an energy supplier but also as a crossroads in global trade and logistics.

Ports such as Dubai handle vast volumes of international shipping, linking Asia, Europe and Africa. As tensions spread, the reliability of these logistics systems is increasingly called into question.

The result is a shift to more widespread insecurity, where both energy flows and trade infrastructure – things like major container ports, shipping lanes, export terminals and storage facilities – are simultaneously at risk.

Energy is the heart of global supply chains. Manufacturing depends on electricity and fuel, transport relies on oil-based logistics and agriculture depends heavily on natural gas-derived fertilisers. When energy flows are disrupted or become more expensive, the effects propagate across entire networks.

Research on geopolitical crises shows that disruptions to key inputs such as oil and gas quickly translate into broader supply chain instability. This affects production, trade and the availability of goods far beyond the conflict zone. The Iran crisis reflects this dynamic. What begins as disruption in a maritime corridor can become a global economic issue within days.

For decades, global supply chains have been optimised for efficiency. This means that they concentrate sourcing and production in regions that minimise costs. This model has delivered large economic benefits, but it has also created weaknesses in the structure.

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map of the strait of hormuz
The crisis in the strait of Hormuz is a prime example of a chokepoint failure.
AustralianCamera/Shutterstock

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The concentration of energy flowing through a single chokepoint such as the strait of Hormuz exemplifies this trade-off. When it is disrupted, the system lacks resilience.

In response, supply chains are likely to accelerate efforts to diversify and invest in alternative energy routes and sources. Countries that are heavily dependent on oil transiting through the Gulf will seek to expand strategic reserves, diversify their import routes and invest in pipelines that bypass maritime chokepoints.

But at the same time, geopolitical instability strengthens the case for renewable energy, electrification and regional energy integration. Expanding solar, wind and green hydrogen capacity reduces exposure to concentrated fossil fuel corridors. And cross-border electricity connections can improve flexibility during shocks. In this sense, resilience is also an energy transition issue.

At the same time, instability in conflict-hit regions can fuel the rise of informal and illegal supply chains, particularly where governance is weakened. These can include things like unregulated oil trading, goods being smuggled through informal maritime routes and labour exploitation hidden within subcontracting chains.

What’s more, supply chains themselves are increasingly shaped by geopolitical forces, as states use trade, energy and logistics networks as instruments of power.

For consumers, this could mean greater price volatility, shortages and reduced choice as firms adjust sourcing strategies in response to sanctions, trade restrictions or security risks. In some cases, it may also mean higher costs over the long term, as businesses prioritise resilience over efficiency.

A turning point for globalisation?

The situation in the strait of Hormuz may mark a turning point in how global supply chains are understood. It has shone a light on a fundamental tension at the heart of globalisation. Efficiency depends on sourcing and production being concentrated in a few locations, but resilience depends on diversification. When critical links in the chain fail, the consequences extend far beyond their immediate location.

This war demonstrates that supply chains are not merely economic systems. They are deeply embedded in geopolitical realities. The challenge ahead is not simply to manage disruption, but to redesign supply chains and energy sources for a world in which geopolitical risk is no longer exceptional, but structural.The Conversation

Maryam Lotfi, Senior Lecturer in Sustainable Supply Chain Management, Cardiff University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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