By Abdylmenaf Bexheti
The world shows no signs of calming down. Even before one hotspot has cooled, a larger one emerges. The recent attack by the U.S. and Israel on Iran, always under the pretext of neutralizing and controlling nuclear capabilities on one hand, and toppling the theocratic regime on the other (allegedly to liberate the Iranian people), also carries, as always, economic interests in the background—similar to what we have seen in Venezuela and elsewhere around the world.
Iran holds over 20% of the global oil potential, ranking as the second largest country after Venezuela, or third after Saudi Arabia, depending on the energy statistics sources. Nevertheless, with around 200 billion barrels of oil reserves and a daily production of about 20 million barrels, it shakes the global economic markets.
Beyond its massive reserves and daily production, Iran, with its geostrategic position—especially its control of the Strait of Hormuz (about 30 km wide)—controls the maritime transport of over 25% of oil exports, mainly to India, China, Japan, South Korea, and partially to Europe. This directly affects alternative transport costs.
In both cases, whether through reduced production or disrupted transport, the supply chain of the world’s most strategic product—oil and its derivatives—will again be disrupted. Forecasts suggest that prices could rise above $100 per barrel.
This, in addition to impacting the global economies of the major importing countries mentioned, will undoubtedly affect the European economy as well, which is still recovering from previous disruptions in gas and Russian oil supplies caused by the Ukraine conflict.
This uncertainty, caused by disruptions in oil markets, will certainly create turbulence and instability in financial and capital markets. First, it may continue to drive up gold prices and strengthen the U.S. dollar.
When the export and import supply chains are considered simultaneously, the impact on the global economy doubles—and unfortunately, it is negative in this case.
The region, and especially the economy of North Macedonia, which is more open than it should be, will be directly affected by rising oil prices and, in a less direct but still powerful way, by declining exports to Europe and the world.
Imported inflation will resurface everywhere, and the risk of two simultaneous negative trends—economic contraction and rising prices, what economists call stagflation—will reemerge.
Therefore, regional authorities, and especially local ones, instead of posting statuses about “whose side they take” in this conflict (as if we were that important!), primarily to curry favor with the powerful, would do better to do their homework—analyzing where, how much, and in what ways we may be affected—and to build strategies for how to mitigate the consequences of this madness affecting the world.
*Abdylmenaf Bexheti is a university professor at SEEU University, a former Minister of Finance, and an expert in economics, geopolitics, and regional security. He is a permanent member of Macedonian Academy of Sciences and Arts.