Experts Warn Prolonged Iran War Raises Threat of Economic Catastrophe, Food Scarcity

Experts are raising concerns about the global impact that a lasting conflict in the Middle East could have on the world economy and food insecurity. An end to the conflict would likely reopen one of the world's most important shipping routes. But at the moment, the two sides are struggling to resume talks.   

The conflict between the US-Israeli alliance and Iran has created “the biggest (energy) crisis in history," said Fatih Birol on French radio Tuesday. Birol is head of the International Energy Agency. His remarks came a week after the International Monetary Fund warned that a long-term Middle East conflict could push the global economy into recession. That means it would be a lengthy decline. Two days before that, the United Nations warned the conflict could lead to a major drop in the global food supply.   

The crisis now centers on the closing of the Strait of Hormuz. About one-fourth of the world’s seaborne oil moves through the shipping channel. But oil is not the only resource that moves through it. About one-fifth of the world's liquified gas (LNG) is shipped through the strait. One-third of its fertilizers flow through it as well. If it stays closed, experts say it could trigger mass business failures. Flights could get grounded for lack of jet fuel. LNG shortages could cripple power grids that rely on it. That's especially true in Asia. It could even mean severe hunger. That's because many of the world's farmers rely on the fertilizer that comes through the strait.   

Some Asian countries receive 80% of their oil and LNG from shipping through the Strait of Hormuz. Some have begun to ration fuel. That has meant closing gas stations during peak hours. It’s also involved placing limits on the days certain cars can be on the road.  

Meanwhile, the US and Iran can’t agree on whether they will resume talks. Both sides remain far apart on a number of issues. One key sticking point is whether Iran can keep its nuclear program. Another is whether it can support anti-Israel militias.   

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Photo of IEA Executive Director Birol speaking during a press conference from Reuters.