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Energy and Trade Disruption Are Now Operating Conditions

6 days ago
1 min read

Oil supply constraints and product-by-product tariff actions have run through all of 2026. Operations plans built for a return to normal carry the cost.


This year companies have absorbed a disruption of oil flows through the Strait of Hormuz, a change in the legal basis of US tariffs, new product-specific duties and an annual review of the North American trade agreement. None of these has resolved. Each now has a date attached: a forecast revision, a duty effective date or a comment deadline.


Operations are affected in three places. Energy, freight and insurance move landed cost within weeks. Duty changes by product and origin move the cost of specific bills of material. Lead times extend where suppliers ration critical materials such as rare earths and specialty chemicals.


Leading operations teams have moved from one plan to a plan with defined decision points. They qualify a second source for materials that come from one country, track landed cost weekly rather than quarterly, and agree in advance which price, inventory and sourcing actions follow each decision point.


Three actions for the leadership team:


1. Identify the materials with one source country. Rank them by revenue at risk and qualify a second source for the top tier.


2. Put landed cost on a weekly cadence. Include energy, freight, insurance and duty by product and origin.


3. Agree the decision points now. Define the oil price, duty change or supplier event that moves pricing, inventory or sourcing, and who approves the move.


Which three materials would stop a production line if their single source country restricted exports next month?


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