The serious question that arises today is what economic impacts could occur on countries and citizens if this war continues for a long time? And why do we think this war is economically dangerous?
First, it should be noted that the region where the war is currently being fought is unlike any other region in the world, as it is responsible for 30% of the world's oil production. About 40% of oil exports to international markets come from there, and the Persian Gulf holds about 40% of the world's natural gas reserves. For example, the gas field shared between Qatar and Iran, known as the North Field, is the largest gas field in the world, and the Qatari portion of it makes Qatar the world's largest exporter of liquefied natural gas. But the Iranian portion is the backbone of Iran's gas production, and this is information that we should emphasize with a bold line.
This means that 20 million barrels of oil pass through the Strait of Hormuz daily, which is approximately 20% of the world's oil consumption, and liquefied natural gas is also supplied to countries around the world. Therefore, any tension and continuation of the war in the Gulf can immediately shake the global energy market, raise prices, and this can negatively affect the pockets of citizens.
Therefore, the suspension of navigation in the Strait of Hormuz will lead to an insane increase in oil prices and they can easily exceed 120 to 150 dollars per barrel, which can cause great damage to the stock exchanges in the Gulf.
It is no coincidence that yesterday one of the famous businessmen in the Gulf (Half Habtur) sent a message to US President Trump, asking him “Why did you push the Gulf countries to this war?“.
If we want to talk in numbers, we can say that the economy of all the Gulf countries is about 2.2 trillion dollars, and therefore in the early days of the war, many unclear losses, in addition, the partial or complete closure of airspace causes Gulf airlines to lose between 150 and 250 million dollars per day due to flight suspensions, rerouting or cancellations and compensation for passengers, at the same time, the stock markets are affected very quickly, since it is natural that any military tension in the Gulf region will cause the stock markets to fall by between 3 and 5% due to the state of uncertainty and anxiety that surrounds them.
If we assume that the market value of the Gulf markets is around 4 trillion dollars, then a drop of, for example, 5% means a temporary loss of around 200 billion dollars,
That is why economic experts are asking themselves, when will this war, which represents a terrible crisis for the Gulf countries and is affecting world markets, end?
On the other hand, there is a belief that the Gulf countries are currently are in an open and serious American impasse. On the one hand, the Gulf states need the United States to ensure the security of the region, there are defense agreements, technology is exported and huge sums are paid to buy weapons and other things, but on the other hand, the continuation of the war represents a constant pressure on the economy of the region, on the stock markets, investors and businessmen, and therefore on the citizens.
With this difficult and contradictory equation, stopping the war now and quickly could represent the worst-case scenario for the Gulf states in particular, because stopping the war now could leave Iran hurt, angry or affected, but not defeated and unchanged.
This means that there will be no real change in its military power or in its weapons stockpiles, and in this case it will direct its anger at its Gulf neighbors, because Iran will then learn an important and very dangerous lesson, namely that hitting the Gulf with missiles and drones can have pressure on its main enemy, the United States, and this pressure could change Washington's position towards it. This could be repeated in any future crisis, in addition, the current war has proven to the Iranians that the United States has no plans to directly defend the Gulf countries and has withdrawn from helping to repel Iranian missile and drone strikes on those countries, despite the presence of American military bases there.
With the end of the war now, Iran will realize that it represents for the United States the stick that allows it to exhaust the Gulf states and dominate their resources under the pretext of defending them against the growing power of Iran, as well as exhaust them financially by purchasing the latest American military products and equipment, as they did with Kuwait and scaring them with what Saddam Hussein might do by reoccupying them.
Furthermore, if a new clash occurs in a few years, perhaps Iran will have the opportunity to hit the Gulf states bigger and with greater force, taking advantage of what it has learned from the experience we are experiencing today.
Iran is beginning to realize that the more pressure it puts on the Gulf states, the faster America will rush to stop the war. Therefore, the Gulf states, from their perspective, see that continuing the war, despite its economic risks, could change the balance of power in the region if the United States succeeds in achieving its goals in Iran, despite the doubts of the Gulf states themselves about the true desire of the United States to change the balance of power, which contradicts their desire to exhaust the countries in the region and impose their security hegemony.
So, considering the position of the United States, we find something surprising, since the position of President Donald Trump is not clear in itself and observers cannot determine what Trump wants, since his statements vary on the freedom of the Iranian people, and at another time he talks about a deal with Tehran, and in a third position he talks about negotiations with the Iranian Revolutionary Guard or the claim that Iranian intelligence is talking to Washington, and among other statements about the possibility of this war ending within a few days, then he or his ministers again talk about the possibility of this war lasting four or five weeks, while the Pentagon is hinting at the possibility of it lasting up to five months.
This shows that the United States has not yet made a final decision on the end scenario of this war.
If this war does indeed expand and the Strait of Hormuz suffers a serious and prolonged disruption, the world could suddenly suffer a loss of 20 million barrels of oil per day, which is enough to raise prices on world markets, not only in the energy market, but also in medicine and food. Some observers predict that the price of oil could easily jump to $180 or $200 per barrel if the Strait of Hormuz remains closed or blocked and dozens of ships pile up in front of it every day, which would lead to a new rise in global inflation, a rise in gasoline prices and economic crises in many countries.
On the other hand, from an economic point of view, an extremely important question arises: why aren't gold prices rising now? Because it is natural for the price of gold to rise during wars, as it is considered an economic safe haven, but sometimes at the beginning of crises the opposite happens, because in short, investors temporarily sell gold to provide liquidity, seeking to buy defensive stocks or shares in the technology markets, and this is exactly what happened at the beginning of the coronavirus crisis.
Since gold fell at the beginning of the crisis, then quickly rose again, in addition, during crises the demand for dollars increases, and the proof of this is the daily increase in dollar prices at the moment, which is causing temporary tension in the gold market, but then it is certain that gold will return to an increase, especially if the situation develops and expands with the entry of NATO and the emergence of a global energy crisis, or with the direct or even indirect involvement of Russia or China, at which point the whole world could be approaching a much larger conflict.
So, will the major countries manage to contain the conflict before it is too late and before it gets out of control, or we face a strong possibility of a new world war breaking out in the Gulf region, reshaping it and disrupting the rules and balances of power within it...