The war that began on February 28 with United States and Israeli strikes on Iran completes six months this Friday (28) with no end in sight. The conflict, which drew in 16 countries according to Folha de S.Paulo, has already redrawn the balance of power in the Middle East and spread its effects across energy, food and investment markets worldwide, according to a survey by G1.
At the heart of the stalemate lies the Strait of Hormuz, the narrow waterway between Iran and its Gulf neighbors through which about a fifth of the world's traded oil and liquefied natural gas passes. Tehran still controls the passage, and the drop in traffic along the route has shaken the global energy market. On the American side, President Donald Trump combines talk of disengaging from the region with a large-scale military intervention. Israeli Prime Minister Binyamin Netanyahu, Washington's ally in the first weeks of fighting, pushed for the fall of the Iranian theocracy. The regime, however, survived the killing of Supreme Leader Ali Khamenei, who was replaced by his son Mojtaba Khamenei, and kept its ability to strike back at American allies in the region, according to Folha.
For countries like Brazil, the shock arrives mainly at the dinner table. The Hormuz squeeze disrupted the international fertilizer trade, an essential input for Brazilian agribusiness, and added to the effects of El Niño and the grain shipping disruptions caused by the war in Ukraine. As a result, global food prices hit their highest level in more than three years in July, according to the United Nations Food and Agriculture Organization (FAO), as reported by Reuters. JPMorgan estimates that a strong El Niño, even without the war, could add about 0.7 percentage points to global food inflation at the peak of the impact, which tends to be greater in Asia, Latin America and Africa, where families spend a larger share of their income on food.
Oil up, safe havens in doubt
Brent crude topped $120 a barrel in April and is up more than 20% this year, according to Folha. Diesel came under additional pressure from Ukrainian attacks on Russian refineries, which cut supply on the international market, while higher output and exports from American refineries eased concerns over jet fuel, G1 reports. With the Northern Hemisphere winter approaching, when energy demand rises, fresh problems in Hormuz or in Russian energy infrastructure could push fuel prices and inflation up again.
Despite the energy shock, global stock markets kept climbing. The value of companies in the MSCI world stock index, which covers markets in 47 countries, hit a record $105 trillion this month, up 9% since the war began, driven by heavy investment in artificial intelligence. Assets traditionally seen as safe havens, however, behaved unevenly: the dollar is up about 1.4% against a basket of major currencies, United States government bonds have lost about 3.5%, and gold fell almost 25% through July before jumping more than 15% this month alone.
The Gulf pays the highest bill
The Gulf's oil and gas producers are among the hardest hit economically. Saudi Arabia's exports fell 10% from the first to the second quarter. In Qatar, Oxford Economics estimates the economy will shrink by almost 30% this year because of damage to the Ras Laffan gas complex. The Qatari and Emirati stock markets fell about 14% over the period, moving against the global market, and property sales in Dubai dropped between 70% and 80%, according to a JPMorgan estimate.
On the diplomatic front, the picture is also one of paralysis. The 60-day deadline of the Memorandum of Understanding between the United States and Iran to end the war is nearing its end amid a stalemate, according to G1. In Folha's assessment, the military outcome so far has been limited: Iran's offensive capabilities were degraded, but its retaliation campaign against American allies was not stopped, and the country's nuclear program, presented as the main justification for the war, remains an open question.