War in the Middle East: Global Economic Consequences

Here are the latest global economic developments in the Middle East as a fragile ceasefire between Iran and the United States enters its sixth day.

The US military will impose a blockade of Iranian ports on Monday, as announced on Sunday due to the lack of agreement to end the conflict. However, ships not heading to Iran through the Strait of Hormuz, a strategic passage for global commerce and oil supply, will be allowed to pass. This move was stated in a press release from the Centcom, the American military command for the Middle East.

“The US president’s threats to impose a maritime blockade against Iran are completely ridiculous and amusing,” said Admiral Shahram Irani, head of the Iranian navy.

Oil prices surged by 8% to surpass $100 a barrel on Monday at the beginning of Asian trading, just hours before the announcement of the US blockade of Iranian ports. The West Texas Intermediate (WTI) barrel for May delivery rebounded by 8.34% to $104.62, while the Brent barrel for June delivery rose by 7.97% to $102.79.

In Ireland, the government held an emergency meeting on Sunday to discuss support measures for the rising fuel prices caused by the war in Iran, following days of protests and blockades by various sectors like farmers, truck drivers, and taxi drivers.

Moreover, the east-west oil pipeline in Saudi Arabia, crucial for crude oil exports during the blockade of the Strait of Hormuz, is back in operation after being damaged in attacks, as announced by the country’s authorities on Sunday.

President Prabowo Subianto of Indonesia traveled to Russia on Sunday to meet with President Vladimir Putin to discuss the oil, whose prices have surged due to the Middle East war. The visit confirms the strategic importance of oil for Indonesia.

Published on April 13 at 07:31 AM by AFP.