WAR IN IRAN - WHICH ECONOMIES ARE WINNING AND WHICH ARE LOSING - Filenews 20/3
The economic consequences of the war in the Middle East are already being felt in many countries, from increased heating bills in Britain to the closure of schools in Pakistan for energy-saving reasons. In its analysis, the BBC examines how the new crisis in the region is reshaping the global energy map, creating new "winners" and "losers".
As it is pointed out, turbulence in the energy market does not affect all economies in the same way. Some countries are strengthening their position as suppliers, while others are facing increased costs, inflationary pressures and slowing growth.
The main beneficiaries of the crisis include Norway, Canada and Russia. Despite many economies shifting towards renewable energy, global dependence on oil and gas remains high. This means that, in times of rising prices, countries with large energy reserves and export capacity gain a strong advantage.
This crisis, however, is not seen as an ordinary energy upheaval. The Middle East remains the heart of global energy supply, with the Strait of Hormuz being a crucial route for the international market. Attacks on energy infrastructure and the effective disruption of the flow affect Gulf states such as Qatar and Saudi Arabia, as Tehran targets US allies.
Within this environment, buyers are turning to alternative sources. Norway, which had boosted its production after Russia's invasion of Ukraine in 2022 and the West's attempt to reduce its dependence on Russian gas, appears to be in an advantageous position again. Canada is also attempting to present itself as a stable and reliable supplier, although questions remain about the scope of its production expansion.
According to the BBC's analysis, the biggest beneficiary may be Russia. As the U.S. has eased some restrictions to ease pressure on the market, Russian oil exports to India have increased significantly. Moscow is estimated to be able to make up to $5 billion more by the end of March, potentially recording its strongest year in fuel revenue since 2022. At the same time, opportunities are also created for other large exporters, such as Indonesia, due to the increased use of coal.
On the losers' side, the picture is more complex. Although US President Donald Trump has argued that higher oil prices favour the US economy, the BBC notes that the reality is more complicated. U.S. oil companies may boost their revenues, but that doesn't mean the economy as a whole benefits.
Some companies are directly affected by developments in the Middle East, while especially in the shale oil sector it is not easy to increase production quickly. Above all, the US remains one of the largest consumers of oil and gas, which makes it particularly vulnerable to price fluctuations. According to economists, if prices reach and remain at $140 per barrel, it is possible that the economy will even shrink.
Similar pressures are recorded in the United Kingdom and Europe, where dependence on imported energy remains intense. Rising prices are weighing on households and businesses, fuelling inflation and hampering growth prospects. Although Western economies are more shielded against energy shocks than in the past, dependence on fossil fuels has not disappeared.
The impact on Asia is also significant. The region imports 59% of its oil from the Middle East, while South Korea covers up to 70% of its needs there. The concern extends to the tech industry as well, as the country plays a crucial role in the global production of memory chips.
In some economies, the pressures have already translated into emergency measures. In Sri Lanka, Bangladesh and the Philippines, policies such as fuel rationing, four-day work and school closures have been implemented. In contrast, China and India appear more protected, as they have strengthened their reserves and diversified their supplies, including through Russia.
The final outcome for the global economy will depend on the duration and intensity of the conflict. As the war drags on, the risk increases that the effects will not be limited to individual countries, but will acquire a broader international dimension.
From inflated heating bills in homes in Britain to schools closed in Pakistan for the sake of savings, the economic impact of the war in the Middle East is already being felt strongly.
A BBC analysis attempts to map the "winners" and "losers" of the crisis. As it is pointed out, turbulence in the energy market affects economies internationally in a different way, as while some countries are strengthening their position, others are facing increased costs and pressures as the consequences are not equally distributed. Next to a long list of affected countries, there are those that seem to benefit. What are they?
The "winners": Norway, Canada and Russia
Despite efforts to shift to renewable energy, the world remains heavily dependent on oil and gas. Large reserves promise significant profits – which is why oil has been labelled "black gold". When prices go up, producers win, while consumers are burdened. Play Video
However, this is no ordinary energy crisis. The Middle East remains the "heart" of the global supply, with the Strait of Hormuz being a key artery. Attacks on energy infrastructure and the effective disruption of the flow have hit Gulf countries such as Qatar and Saudi Arabia, as Tehran targets US allies.
As buyers look for alternative sources, countries like Norway and Canada may benefit. After Russia's invasion of Ukraine in 2022 and the West's attempt to wean itself off Russian gas, Norway increased its production and took advantage of the situation. Canada, for its part, is trying to project itself as a "stable and reliable" energy supplier, although there are doubts about how much it can increase its production. At the same time, Russia may be the biggest beneficiary. As the U.S. eases some restrictions to address the shortage in the market, Russian oil exports to India have increased by 50%.
It is estimated that Moscow can earn up to 5 billion dollars more by the end of March, while it may record the best year in fuel revenue since 2022. At the same time, the increase in coal use also creates opportunities for large exporters, such as Indonesia.
The "losers": USA, UK and Europe
But what about the US itself? President Donald Trump argues that when oil prices rise, the country "makes a lot of money". Indeed, American producers may see significant profits. But this does not mean that the economy as a whole benefits.
On the one hand, some companies are directly affected by developments in the Middle East. For example, ExxonMobil has facilities in Qatar that have been affected by attacks. On the other hand, many producers – especially in the shale oil sector – cannot increase their production quickly.
Most importantly, however, Americans are among the world's largest consumers of oil and gas. From heating in winter to travel, they are particularly exposed to price fluctuations. According to economists' estimates, if oil prices reach $140 and remain there, there is a risk of a contraction of the economy. The picture is similar in Europe and the United Kingdom, which are heavily dependent on imported energy. Rising prices are boosting inflation and weighing on growth.
Although Western economies are now more resilient to energy shocks than in the past, dependence on oil and gas remains high, affecting households and businesses.
In Asia, the impact is also significant. The region imports 59% of its oil from the Middle East, while South Korea reaches up to 70%. Concerns are also focused on the tech industry, as South Korea produces more than half of the world's memory chips.
In other countries, such as Sri Lanka, Bangladesh and the Philippines, measures such as fuel rationing, four-day work and school closures have already been taken. In contrast, China and India appear more protected, having increased their reserves and turned to alternative supplies, such as Russia.
How the situation develops depends on the duration and intensity of the conflict. As the war drags on, the risk increases not only for individual economies, but also for wider global impacts.
Source: TheToc
