Foreign media: U.S.-Israel strikes on Iran trigger oil crisis, leaving scars on global economy

What are the ripple effects of the AI · Hormuz Strait shipping disruption on chip manufacturing?

Recently, the risks posed by the US and Israel’s attacks on Iran to the global economy have attracted attention. Several foreign media outlets point out that as the conflict spreads, it is creating risks for global supply chains, energy markets, and economic outlooks.

On March 21, the Financial Times published an article titled “The Iran War Will Leave a Wound on the Global Economy,” noting that since the US and Israel attacked Iran, financial markets have underestimated the risk of severe disruption to shipping through the Strait of Hormuz. Now, with the conflict between the US, Israel, and Iran entering its fourth week, the most concerning scenarios for investors and policymakers are gradually becoming apparent.

The article analyzes that, in terms of transportation volume, a long-term blockade of shipping through the Strait of Hormuz could trigger a more severe oil crisis than in the 1970s. Although the global economy’s dependence on oil has decreased today, oil remains crucial for transportation and industrial production.

Since the US and Israel launched military strikes against Iran, international oil prices have surged about 50%, breaking through $100 per barrel. As oil supplies in the region remain blocked for the long term, analysts expect prices could exceed $150 per barrel, and if such high prices persist, the probability of a global recession will significantly increase.

Additionally, threats to global natural gas supplies are becoming more evident. The Financial Times pointed out that Ras Laffan Industrial City in Qatar is the world’s largest liquefied natural gas (LNG) production facility. With this industrial city under attack, natural gas prices in Europe and Asia have soared.

At the same time, disruptions in the transportation of fertilizers, helium, and sulfur through the Strait of Hormuz are causing concerns across multiple industries, from chip manufacturing to agriculture.

The article also emphasizes that some economies are more vulnerable to risks. European countries are no longer relying on Russian fossil fuel supplies, turning instead to the US, but many of these countries have limited fiscal buffers, making it difficult to mitigate the pressures from rising global energy prices on households and businesses. Developing countries face multiple pressures, including reduced capital flows from the Middle East and food shortages.

Furthermore, although the US is a net energy exporter, it is not immune to the severe impacts of rising energy prices.

Finally, the article stresses that the longer this conflict continues, the more severe shortages, price surges, and supply chain disruptions will become. Regardless of how the conflict ultimately ends, it will leave an “indelible mark” on the global economy.

In agreement with this view, The Guardian’s article on March 22 also pointed out that over time, the impacts of the US-Israel-Iran military conflict are becoming increasingly apparent, from rising gasoline and diesel prices faced by drivers to severe travel disruptions caused by flight cancellations.

The report states that in a prolonged conflict, energy supply restrictions are expected to affect products like fertilizers. Ahead of the critical spring planting season in the Northern Hemisphere, analysts warn that rising fertilizer costs will impact crop yields and push up food prices. This will harm the interests of low-income countries and impoverished families worldwide.

Additionally, the report further notes that industries such as plastics, chemicals, and pharmaceuticals are also being affected. With Qatar’s production halted, helium supplies are disrupted, and helium is vital for chip manufacturing and other fields. Analysts say this could impact the global manufacturing supply chain, affecting everything from automobiles to electronics.

At the end of the article, The Guardian quotes an economist from Société Générale, saying, “Sometimes, you have to walk to the edge of the cliff to remember why you can’t cross it. And perhaps now is such a moment.”