Consoled with the success of his efforts in Venezuela, Trump, on 28 February this year, together with Benjamin Netanyahu, conducted an attack on Iran. I believe that this was a terrible mistake, which has immense and long-term consequences. In any areas they can take on a scale comparable to the global lockdown period or the energy crisis of 2022. So in this overview of graphs, I focus mainly on natural materials markets, due to the fact that that's where a lot is going on. However, I have tried to focus on the little apparent consequences of the war in Iran, which, in my opinion, escape many people. Welcome to the reading!
Stopping oil trade by the Ormuz Strait
Due to the conflict in the mediate East, the movement of tankers and another ships with natural materials through the Strait of Ormuz practically froze. The graph below shows this well.
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The Ormuz Strait is 1 of the key bottlenecks in the oil trade. According to the diagram below, about 21 million barrels of oil per day flow through it under average conditions. This is about 1/5 of the global consumption of this natural material.
Difficulties in the availability of LNG and fertiliser
Similarly, LNG, or liquefied natural gas. Around 20% of the world's LNG flows through Ormuz.
However, it must be stressed that ]]>oil and gas]]> are not the only natural materials for which the US-Iran conflict plays an crucial role.
Less apparent ones include sulphur. According to the diagram below, about 44% of trade in this natural material is carried out through the Strait of Ormuz. Then urea (urea) – about 31%, ammonia (ammonia) – 18% and phosphates (phosphates) – 15%.
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Each of these natural materials: natural gas, sulphur, urea, ammonia and phosphates are utilized to produce fertilizers. So while ]]>the eyes of investors]]> They are primarily focused on oil and gas quotations, and tensions are besides expanding in the fertiliser market, which well reflects the illustration below. It presents the Nasdaq US Benchmark Fertilizers Index. This index is designed to reflect the results of companies in the U.S. fertiliser industry.
Includes companies dealing with, among others:
production of nitrogen, phosphorus, potassium fertilisers,
chemicals for agriculture,
fertilisers.
As you can see, index ratings have been at the highest levels since September 2023.
Here it is worth noting that in the present environment, fertiliser producers from Asia and Europe are in a much worse situation than their competition from the US, where it is much easier to supply themselves with gas at reasonable prices.
Growing food prices
In general, erstwhile fuel prices increase, food prices are more expensive. This is related, among others, to the increase in transport costs (the transportation of bananas from the maker from the another end of the planet to the store shelf becomes more expensive). This dependence is shown rather well by the illustration below, on which the prices of petrol are marked in blue, and in yellow the index of food prices.
If we look at how natural materials prices behaved ]]>Energy]]> during the last period (see table below) and we will add to this difficulties in the fertiliser market, this more costly food is almost certain.
What makes this issue peculiarly crucial is not only its inflationary effects, but besides the social consequences that frequently follow.
Rapid increases in food prices were historically linked to expanding social unrest, protests and political instability.
Continue reading: ]]>Independent Trader - independent financial portal]]>
Source: ]]>Independent Trader]]>
Author: ]]>Konrad Parsley]]>
