The war in Iran continues to hit the global economy. What the media is writing
The ongoing conflict in the Middle East is dealing new blows to the global economy. A shock is expected in the gas market due to the shutdown of a large terminal in Qatar. The blockade of the Strait of Hormuz threatens to reduce the supply of fertilizers and increase food prices. Airlines are preparing for fuel shortages. What the world's media write about the economic consequences of the war with Iran is in the Izvestia digest.
Bloomberg: Qatar strike changes the future of the gas market
Every week, while the world's largest liquefied natural gas (LNG) plant is idle, the world is losing enough energy to power Sydney's homes for an entire year. The Ras Laffan plant in Qatar was shut down in early March after an Iranian drone attack, marking the first supply outage in three decades of operation. After further strikes — in response to the Israeli strike on the vast South Pars fields on Wednesday — the complex was severely damaged and it will take up to five years to rebuild.
Bloomberg
The latest strikes damaged two production lines of the plant, with a total capacity of 12.8 million per year, or about 17% of Qatar's LNG exports. For most countries, this will mean higher energy prices. For developing countries, the most important LNG markets, the second gas disaster in four years will destroy industrial demand, perhaps irreparably.
The longer this goes on, the more clearly the only solution will remain — reducing gas consumption in the world, and this is a serious blow to the industry, which positions itself as a reliable and affordable transition stage from dirty coal to full dependence on renewable energy sources. Without gas, power plants are reducing electricity generation, and plants for the production of fertilizers and textiles are closing. The consequences of a long-term shock may be even more significant than the energy crisis of 2022.
Reuters: War in Iran threatens new food price shock
Disruptions in the supply of fertilizers and a sharp rise in energy prices due to the war in Iran threaten to trigger a new spike in food prices in vulnerable countries, which could lead to a multi-year recession just as many of them are recovering from a series of global shocks. The conflict with Iran threatens to leave households in a difficult situation, depriving them of the opportunity to feed their families.
Reuters
"This could have a significant impact on prices, including food prices, in the long term," said Odile Renaud—Basso, president of the European Bank for Reconstruction and Development, a key lender in about 40 emerging economies. In most developed countries, food and fuel account for less than a quarter of the consumer inflation basket, while in many developing countries they account for between 30% and 50%, said Marie Diron, managing director of the Moody's Ratings agency. "This situation makes many economies particularly vulnerable to price volatility caused by external factors," Diron said.
One of the main problems is the fertilizer market. According to the Food and Agriculture Organization of the United Nations, about 30% of the global fertilizer market passes through the Strait of Hormuz, and producers from the Persian Gulf countries are major suppliers of ammonia and carbamide. Bank of America warns that the conflict threatens 65-70% of global urea supplies, and prices have already increased by 30-40%.
Associated Press: War in Iran signals global need for renewable energy development
The war in Iran exposes the world's dependence on fragile fossil fuel transportation routes, fueling calls for an accelerated transition to renewable energy sources. Unlike previous oil crises, renewable energy is now competitive with fossil fuels in many places. According to the International Renewable Energy Agency, more than 90% of new renewable energy projects in the world in 2024 were cheaper than fossil fuel alternatives.
Associated Press
Oil is used in many industries besides electricity generation, for example, in the production of fertilizers and plastics. Therefore, most countries are feeling the effects, while countries with a higher proportion of renewable energy sources are in a more secure position, as they rely on domestic resources such as solar and wind rather than imported fuels.
China and India face the same problem.: how to produce enough electricity to support the growth of more than a billion people. Both countries have expanded the use of renewable energy sources, but China has done so on a much larger scale, despite its continued reliance on coal-fired power plants. Today, China is the world's leader in renewable energy sources. About one in ten cars in China is electric. The country is still the world's largest importer of crude oil and the largest buyer of Iranian oil. However, the electrification of a part of the economy through renewable energy sources has reduced dependence on imports.
Financial Times: airlines are developing plans in case of fuel shortages
Airlines are developing contingency plans related to a potential shortage of jet fuel, which they fear may occur in the coming weeks due to the war in the Middle East. The heads of aviation companies said it was difficult for them to obtain guarantees of fuel availability after next month.
Financial Times
"Today we are developing plans in case of fuel shortages," said Ben Smith, executive director of Air France-KLM. This includes reducing flights to certain regions of Asia in case refueling for the return flight to Europe becomes difficult. "Southeast Asia is much more dependent on fuel supplies through the Persian Gulf than Europe,— Smith said. — We can get fuel from Europe, but when we arrive in a city in Southeast Asia, we cannot fly back... You can't fly without fuel."
Some energy traders believe that a shortage of aviation fuel is inevitable in some regions of the world. According to them, despite the fact that some countries, including Europe, have sufficient fuel reserves, planes still have to refuel at their destinations, and they cannot take enough fuel with them for the return flight. There is also a shortage of marine fuel and liquefied petroleum gas.
The New York Times: Global luxury brands face military crisis in Dubai
Located near the world's tallest building, Dubai Mall is usually a busy place where wealthy people can buy Rolex watches, Hermès bags and Ferragamo shoes or spend $80,000 on a Faberge egg. Dubai has become the most powerful engine of retail growth in the region. Morgan Stanley estimates that half of all luxury goods sales in the Middle East are in the UAE, and most of these transactions take place in Dubai.
The New York Times
But almost three weeks after the start of the US-Israeli war with Iran, there were few customers in the huge mall at the foot of the Burj Khalifa. Around noon, a few residents with Louis Vuitton bags full of new purchases looked into the shop windows, examining dresses and high-heeled shoes.Most of the shops were open, but empty.
The attacks from Iran have destroyed part of Dubai's protective aura, touted for decades as a safe, luxurious, and tax-advantaged haven for the global elite in a troubled region.Tourism has stopped, and stranded travelers have been trying to find ways to evacuate. The war has created a crisis for luxury brands. It is estimated that sales of luxury goods in the Middle East will halve in March due to a sharp drop in the number of foreign tourists.
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