The Strait of Hormuz crisis shows energy security is now a boardroom issue

Victor Nian is a founding co-chairman of the Centre for Strategic Energy and Resources.

For many corporate leaders, energy risk means just higher fuel and electricity bills. Spiking oil prices mean tighter margins and more cost-cutting. Energy is a problem for governments to solve, not for boardrooms to manage.

That assumption is outdated. A closed Strait of Hormuz, which carries a fifth of the world’s oil supply and a significant share of liquefied natural gas, should be a wake-up call for executives. The consequences of Middle East tensions don’t just stop at gas stations or household utility bills; instead, they quickly percolate through the economy, through higher costs for everything from freight and packaging to food and insurance.

Energy shocks have always been a threat to the broader economy, but energy is now deeply embedded in complex, electricity-dependent business systems. Manufacturers rely on just-in-time supply chains, while retailers need temperature-controlled warehousing and complex logistics networks. Data centers and cloud services need uninterrupted........

© Fortune