The war on Iran waged by the United States and Israel has laid bare in dramatic detail the economic importance of the Persian Gulf. Crude oil isn’t only important for transportation fuel, but it, and its many byproducts are necessary for all sorts of manufacturing and agricultural processes as well. Maxine Davey and Eli Wizevich report for Foreign Policy magazine:
The closure of the Strait of Hormuz has laid bare the world’s economic dependence on the narrow waterway leading out of the Persian Gulf. Nearly three months into the Iran war, it is well known that around one-fifth of the world’s liquefied natural gas (LNG) and petroleum products normally passes through the strait.
Rising energy prices might be just the first harbinger of a truly global crisis, though. Despite a U.S.-Iran cease-fire, the ongoing Hormuz blockade is straining supplies of the other critical yet overlooked ingredients of the world economy that are downstream from fossil fuels, including sulfur, helium, nitrogen, aluminum, and plastics.
Trace those shortages further down supply chains, and it becomes clear that few commodities are insulated from the Iran war. From diet soda to the semiconductor industry and beyond, the impact of the conflict will likely be felt around the world long after the strait reopens.
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