Global economics and business are on a level 10 emergency alert following the current developments in the Middle East. After intense military buildup from both Iran and the US-Israel front, the US launched Operation Epic Fury on February 27. This resulted in the assassination of Iran’s supreme leader. In retaliation, the Iranian Revolutionary Guard declared a sea blockade, closing the strait of Hormuz and threatening any boat attempting to pass. This poses a massive global risk since the strait is a crucial passage for 25% of the world’s oil accounting for 21 million barrels daily. This direct assault on the global energy supply chain has, via basic supply and demand, increased oil prices above 100 dollars a barrel. This inflationary pattern affects not only the price of gas but the price of all goods, increasing the consumer price index, and could escalate into a global recession, reducing purchasing power for consumers and companies. For most firms, energy is a fundamental input across the value chain and so this blockade increases overall costs and, in extreme cases, may decrease production capacity.
From the Sustainable Development Goals’ (SDGs) perspective, this conflict creates a massive negative impact. As a violent environment follows the collapse of diplomacy, SDG 16 and targets 16.1, 16.6, and 16.A, suffer setbacks due to the casualties and the absence of peace. Additionally, SDG 7 and target 7.1 are central to this issue, as oil becomes a primary weapon in any 21st-century conflict due to its scarcity and utility. This war stops the universal access to energy that SDG 7 aims to achieve. Moreover, the resulting inflation and economic crisis delay sustainable growth, misaligning with SDG 8 and targets 8.1 and 8.2.
To navigate this uncertainty, business leaders should adopt specific strategies to build resilience. First, companies must accelerate supply chain diversification to reduce reliance on Middle Eastern shipments. Furthermore, firms should increase investment in energy efficiency and quickly transitions to renewables. This reduces operational costs in fossil fuel markets while contributing to the sustainability goals resulting in a win-win situation. Finally, businesses should engage in positive diplomacy to mitigate war consequences, such as pro-bono services for NGOs or helping the Red Cross establish itself in war zones via supply donations or expertise like risk mapping.
To conclude, a truly resilient business does not just financially overcome war’s consequences; it actively contributes to a world capable of cooperation and SDG alignment despite times of crisis.
Maria Teresa Silva Serrano Do Nascimento Fernandes, Student of the SDGs as Business Strategy Course - Master in Management