I believe that the war in the region will end before the end of this month. I may be right, and this is what we all hope for. Since World War II, the world has never been as complex as it is now. It used to rely on oil as heavily as it does today but had never reached this level of technological advancement. The world has never faced such a prolonged closure of one of its most important maritime straits.
Devastation, losses, and economic recession now threaten every country. If this continues, no country will remain safe for long. The Strait of Hormuz is the most important global waterway for oil tankers, and it is currently blocked. Ras Tanura, the largest oil refinery in the Gulf, and the world’s largest gas terminal in Khor Fakkan are out of service due to direct Iranian attacks, along with assaults on giant oil tankers in the region. Oil prices have not spiked to record levels as expected. Instead, liquefied natural gas (LNG) prices have risen by an even higher percentage. Gas is more difficult to store than oil, whose supply currently exceeds demand.
A large portion of what has been purchased so far is already stored by consuming countries. Therefore, the main challenge for the Gulf oil states is that they will need to shut down their wells once their storage tanks are full. This will affect their production capacity when operations resume, at a very high cost, in addition to technical difficulties. A country like Iraq cannot continue producing oil without selling it, as its storage facilities will be full within a week, which is something that may have already occurred. Kuwait followed suit, despite having storage capacity for 14 days of production. The same applies to the rest of the Gulf states.
Only Saudi Arabia can continue production and storage for slightly more than two months. However, there is no guarantee that oil prices will not surge again if the war continues or if production wells or storage facilities are damaged. This will impact insurance premiums, a serious and significant factor, as well as cause a rise in the prices of all commodities without exception. The world is heading decisively toward a massive global recession. Whether history will repeat itself depends entirely on the duration of this conflict, as the loss of access to cheap oil increasingly threatens both small and large countries, including China. This situation could slow China’s growth, while also affecting Ukraine negatively and benefiting Russia, as allies redeploy interceptor missiles to confront Iran.
The Netanyahu/Trump war, now in its second week, is reshaping travel patterns, energy dependence, the cost of living, trade routes, and strategic partnerships. The war’s repercussions could even delay the crucial midterm elections in the United States, which may be in line with Trump’s interests. The war has shaken the foundations of economies once considered safe havens in a turbulent world. Gulf states have been targeted by more missiles and drones than Iran has launched at Israel. Airports in Dubai and Abu Dhabi have been attacked, and major, wealthy nations have begun efforts to evacuate their citizens stranded there.
The United States has already evacuated tens of thousands of its citizens from the region. In the U.S., according to a report in The New York Times, the war is becoming a political liability for Trump. Public support for the war, which was already low, is starting to decline. Democrats are using rising energy costs to gain votes ahead of the midterm elections, which are increasingly focused on the high cost of living.
The war has also cast a shadow over an event Trump had hoped would be a personal triumph during his presidency: the World Cup, which is scheduled to begin this summer, co-hosted by Canada and Mexico. Iran is among the participating teams, but it is unclear whether it will take part and what the consequences will be if it does not. Europe is on edge, fearing that a collapse of the Iranian economy could trigger new waves of migrants across its border with Turkey.
By Ahmad alsarraf
email: [email protected]
email: [email protected]