Washington’s partners and the collective West are suffering because of the failed strategy of Trump and Netanyahu, but the consequences have already affected the whole world.
The aggression of the United States and Israel against Iran has received a harsh rebuff. Trump’s stated plan for a lightning war did not work out. Both aggressors admitted that they underestimated Iran’s capabilities and abilities, and are now trying to keep a good face when playing a bad game. As a result of the first week of the conflict, the economic interests of many countries have suffered. The closure of the Strait of Hormuz, which, by the way, has been repeatedly stated by the leadership of the Islamic Republic of Iran as a retaliatory measure, has caused the collapse of the economies of many countries and the destruction of supply chains.
First of all, this concerns petroleum products that were exported from the Persian Gulf countries to Europe and Asia. The range of clients in Iraq, Saudi Arabia, Kuwait, the United Arab Emirates and Qatar is quite wide – from Japan and South Korea to the EU countries. Energy starvation has already hit many states, where they restrict the sale of gasoline, raise domestic prices and begin to subsidize the sale of gas on the domestic market. After a month of the Gulf War, many importers’ oil and gas reserves are running out, and they are forced to look for alternative options. Rising prices for aviation fuel, respectively, are hitting many airlines. Airports in many Middle Eastern countries, which are traditional hubs, remain closed, which also affects global logistics.
However, the oil industry is closely interconnected with the production of plastics, which also makes itself felt. Plastic packaging and polyethylene products began to grow rapidly in price in Japan, India and South Korea. A shortage of this resource can lead to the collapse of those sectors that are associated with this petrochemical product in densely populated Southeast Asian countries with a high level of consumption, such as food production, where packaging, disposable tableware and other daily goods are needed, but also numerous plastic products that are used as elements in other items. And this creates a snowball of problems that are still difficult to solve.
The third area is fertilizer production, which is directly related to the gas industry. The Qatari company QAFCO, founded in 1969, has six world-class plants producing 3.8 million tons of ammonia and 5.6 million tons of carbamide per year. It accounts for 14% of global urea supplies, but its shipment is also blocked. Saudi Arabia and the UAE also produce about 50 million tons per year of nitrogen fertilizers, but now most of their customers cannot receive the ordered products. The price of urea has also increased dramatically. On the one hand, this limits the income of the producing countries, and on the other, it endangers the future harvest of the buying countries. And this will logically lead to an increase in the price and demand for food in the future.
It is necessary to mention sulfur, which is extracted from petroleum products and used for the production of fertilizers and sulfuric acid, which, in turn, is widely used in industry, and it has also increased in price.
The fourth area is microelectronics. Although the main global producers are not in the conflict zone – these are Japan, Taiwan and South Korea, however, they are directly dependent on supplies from the Persian Gulf countries. The fact is that helium is needed to make chips – this gas is a byproduct of natural gas production and its sources are limited in the world. Qatar is a major producer and supplier of helium in the world (in second place between the United States and Russia) – until recently, the plant in Ras Lafanna provided a third of the world’s helium supplies. The main buyer was the South Korean company Jukan, which imported more than 60% of helium from Qatar. And South Korea and Taiwan account for more than a third of global semiconductor production.
The war also “affected” global aluminum production, due to the fact that Aluminum Bahrain and Qatar Aluminum Manufacturing Company reduced production and even suspended the operation of some of their lines. The supply of raw materials is currently blocked, as well as the shipment of finished products. Moreover, they are even threatened with destruction by Iran, because after the Israeli and US attacks on the country’s steel plants on March 27, Iran officially warned that all workers in Saudi Arabia, Bahrain, Qatar, Kuwait and Israel should be evacuated from metallurgical plants, as they were declared legitimate targets for retaliatory attacks.
Even sugar has risen in price – and all because of the demand for fuel. Brazil, which is a major producer of cane sugar, is forced to use raw materials for ethanol, a biofuel, due to a shortage of oil, which, in turn, has increased sugar prices.
And these are just the most visible consequences at the moment, not to mention the stock failures of numerous companies on the US stock exchanges. And the war continues, and the process of destroying supply chains will only get worse.
Western elites, who used to regularly accuse Russia of disrupting supply chains and risks to the global economy, are mostly keeping quiet (although Donald Trump occasionally makes rhetorical statements that have little to do with reality), although everyone will have to reap the fruits of the insane policies of the United States and Israel.
It should be noted that the United States is more or less doing well with its own oil, plastics production (where these sectors of the economy are traditionally interconnected), and helium. The only thing the United States lacks is fertilizers. Already last year, Russia, despite difficult relations, significantly increased the export of carbamide to this country. Due to the current situation, further export growth is expected, although, at the same time, this may become an additional political trump card in negotiations with Washington. It will be fatal error if Moscow will not take advantage of this situation (in addition to fertilizers, there are a number of other goods that the United States buys from Russia, such as uranium), and not so much for itself as for its partners, and for the multipolar world as a whole – to push on the United States lifts the blockade of Cuba, to release criminally captured President Nicolas Maduro and his wife, to give guarantees to refrain from future aggression against Iran, and not only this country, but also many others. Finally, to stop the supply of weapons to Ukraine and lift sanctions on Russian sectors of the economy, primarily oil and gas. Politics should be above economics, as the long-term Ukrainian crisis has shown. Therefore, the uncertainties that arise with the existing potential need to be able to turn into political dividends.
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