The heads of the International Monetary Fund, World Bank, and International Energy Agency have warned of the risks to fuel security during the peak demand summer months if oil shipping through the Strait of Hormuz does not return to normal.
“Global oil inventories are being drawn down at a record pace in response to the major loss of supply through the Strait of Hormuz,” the heads of the agencies said in a joint statement.
“If shopping does not return to normal, continued rapid depletion of global oil inventories ahead of peak summer oil demand in the Northern Hemisphere could present increasing risks for fuel security, market conditions, and broader economic resilience.”
The US-Israel war on Iran has engulfed the Middle East in conflict, with Tehran’s retaliatory action targeting Washington’s regional allies and virtually blocking the key waterway, through which a fifth of the global energy supplies normally pass.
The joint statement highlighted that the surge in energy and fertilizer prices due to the war was having a disproportionate effect on lower income countries. “Higher fertilizer prices are of particular concern as many countries enter the planting season,” they said.
At the IMF’s Spring Meetings this year, the organization’s chief Kristalina Georgieva highlighted that the war had forced a paring of the global growth forecast. She estimated that vulnerable economies would need between $20 billion and $50 billion in financial assistance due to the economic fallout of the conflict.
The war has had broad-ranging impacts around the world, especially on countries that are heavily dependent on oil and gas imports from the Gulf, which includes much of south and southeast Asia.
Fertilizer supplies have also been impacted, and countries dependent on imports have been hit hard, with food security a key concern.
Summer may be coming to an end for Filipinos, but the peak demand summer months in the Northern Hemisphere are just beginning. With shipping through the Strait of Hormuz far from normal, and recovery bound to take months, even if a peaceful and sustainable solution is reached, the risks to fuel security are currently massive, which is terrible news for countries like the Philippines that is among those dependent on oil, gas, and fertilizer coming from the Gulf.
We can only hope that our government has already prepared for this eventuality, and has managed to secure alternative fuel and fertilizer supplies while the situation caused by the decision of the US-Israel alliance to wage war on Iran continues to inflict pain on the entire global economy.
This is one case where hoping for a speedy resolution to the conflict is not an option. Urgent action has to be taken to protect our interests and the welfare of those whose lives and livelihood are going to be turned upside down by this war.*
