The Konrad Adenauer Foundation and the Forum for Regional Cooperation invite you to listen to our next meeting of HIWAR FORUM DISCUSSION called “The Implications of the Iran Crisis for Energy Markets in the Middle East”.
“Thanks for having me on. I don’t want to repeat anything that was previously said, so that’s the advantage to going last, but I do want to raise three things that I feel like may not have been said already. So the first is that, you know, when we’re talking about the disruption of the last month and a half, two months, I think that we also need to contextualize it within a larger period of disruption for this region that actually did not start on October 7th, but started during the COVID pandemic. and the disruption to global shipping in this region. If we look at this six-year period in which there’s been consistent disruption to global shipping lanes and supply lanes, that has also had an oil and natural gas impact, but has also just generally affected global shipping, then you look at it from a global perspective, not just from a regional perspective, and you say, this is a problem that needs swift resolutions. This is impacting the cost of living in my country. And certainly when you look at it at the regional level, a region that has prided itself for many decades at being able to deliver the secure and stable and reliable delivery of goods from east to west, this is maybe even more significant than the recent effects of oil and natural gas. And so I do think that this is a very important moment, but contextualized within a period now of increased disruption to the global economy that happens to be rooted in the geopolitics of the region. Obviously COVID, we don’t have to take responsibility for COVID, but it has to do with the management and the functionality of this region, both at a geopolitical level, but also at a regulatory and a technical operational level. So that’s one thing that I think is important to contextualize this war within a broader pattern of geopolitical disruption or supply chain disruption that’s originating from this region, whether it be our fault or not.
The second is that we’ve spoken a lot about oil. I want to just talk a little bit about natural gas, which doesn’t have the existing pipeline infrastructure alternatives that Elai correctly pointed out and mentioned. 20% of the world’s natural gas is delivered out of the Strait of Hormuz. And that natural gas, in comparison to the oil where a lot of it, as Elai correctly pointed out, was purchased in advance of the war and you have these alternatives. So not all of that oil is stuck. A much higher percentage of that natural gas is stuck. And the reason why it matters is because of the role that natural gas plays at an industrial level, but also in the production of electricity. And so for that alone, there is reason for concern provided that this situation endures and continues because there are finite quantities of natural gas, there are finite numbers of producers, and not everybody is going to get those resources. And I think that one of the things that we oftentimes forget, obviously the United States is complaining, Europe is complaining and worrying, and obviously some Asian markets are complaining and worrying. Not all of these countries, not all these states are equal and the pinch will be felt with the weakest countries first. And I just want to mention within the context of this region that the countries that are feeling the pinch first and perhaps hardest are naturally the countries with perhaps the least diverse economies or already suffering economic stress. I’m thinking about countries like Egypt, like Jordan, like Iraq, like Syria, and the tail of this effect of this conflict will be felt longer and harder in those places. more likely than in other countries.
The final thing I want to point out, I did share all of these maps, is that it’s hard to have a conversation about this region, what’s going on without maps. I shared three. One is the map of IMEC, which was a proposed plan prior to October 7th, and it has a whole host of feasibility challenges, both at the political, the commercial, the technical level. But at the very least, there was some kind of plan presented along with other plans. I didn’t have all of the maps available, so I apologize, of diversifying and creating redundancy between East-West travel and trade. And two of the other maps that I presented are new maps. One is a kind of, let’s say, Turkish floated map, the other is a Saudi floated map, that are essentially trying to address all of the same challenges. Now, I think that we should take all of these maps with the equal level of seriousness. and also not seriousness, because inevitably all of these maps, all of these plans, all of these proposals require political, commercial, and technical feasibility, a high degree of cooperation, which in our part of the world, we have not proven to be capable of achieving, right? I think that sets the bar of what this region needs to achieve, but it demonstrates, you know, we’re still in the midst of negotiations and ongoing conflict, we have a long way to go”.
