Hormuz Crisis Sparks Energy Security Concerns
A recent crisis in the Strait of Hormuz has brought to light the risks associated with energy transitions, according to Ken Koyama, Senior Advisor at the Institute of Energy Economics, Japan. The disruption led to a sharp increase in crude oil prices and raised concerns over energy supply security.
Koyama notes that governments may need to absorb greater costs to strengthen energy security. The crisis could lead to policies that reduce dependence on the Strait of Hormuz and address vulnerabilities exposed by the disruption.
Technological innovation and policy intervention are the two major drivers of energy transitions. Market-driven changes from technological innovation and supply expansion can change the economics of energy options and alter supply-demand structures through market mechanisms.