The War on Iran Is Reshaping the Global Economy |
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Iran’s Revolutionary Guards have warned a “new stage of war” has begun after Israel bombed Iran’s South Pars gas field — the largest known natural gas reserve in the world. This comes as the price of oil has spiked to $118 a barrel, a 60% jump since the U.S. and Iran attacked Iran on February 28.
Professor of Gulf studies Laleh Khalili lays out the global economic implications of the effective closing of one of the world’s “major choke points for oil,” the Strait of Hormuz. “It doesn’t benefit the average U.S. citizen … at the gas stations, but it does benefit the oil companies,” says Khalili. “The higher the price of oil goes up, the relatively cheaper it becomes to actually have sustainable alternatives. Of course, that means that it benefits China … since China is way ahead of the rest of the world in producing these technologies.”
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: This is Democracy Now!, democracynow.org. I’m Amy Goodman, with Nermeen Shaikh.
NERMEEN SHAIKH: Global oil and natural gas prices are soaring after Israel bombed a massive natural gas reserve in Iran, the largest in the world. Iran retaliated by twice attacking the world’s largest liquid natural gas production facility, located in Qatar. Iran also attacked key energy infrastructure in Saudi Arabia, Kuwait and the United Arab Emirates. At one point today, the price of oil reached $118 a barrel, a 60% jump since the U.S. and Israel launched its war on Iran.
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In a post online, Trump threatened to blow up the entire South Pars gas field if Iran continues to target the Qatari facility. Trump also claimed the U.S., quote, “knew nothing” about the Israeli attack on the South Pars gas field, but The Wall Street Journal reports Trump approved the strike to pressure Iran to open up the critical Strait of Hormuz.
AMY GOODMAN: About 20% of the world’s oil exports flows through the Strait of Hormuz. President Trump has asked other countries to send warships to help force open the strait, but many nations are rejecting the request.
We’re joined now by Laleh Khalili, professor of Gulf studies at University of Exeter and the author of several books, including her latest, Extractive Capitalism: How Commodities and Cronyism Drive the Global Economy. She also wrote Sinews of War and Trade: Shipping and Capitalism in the Arabian Peninsula.
Professor Khalili, thanks so much for being with us. Can you start off by talking about the state of the Strait of Hormuz right now, its closure; President Trump, according to Reuters, perhaps sending in thousands of troops, what exactly this means; and the Israeli bombing of the South Pars gas field, the largest in the world? President Trump said, in a rare rebuke, the U.S. didn’t know. Most people are saying that is highly unlikely, that is probably untrue.
LALEH KHALILI: So, the Strait of Hormuz is one of the most important choke points for oil — a choke point being an area during which, if it’s closed down, you end up getting a major disruption in the flow of global trade. So, the Strait of Hormuz is one. The Suez Canal is another one. The Panama Canal is another one. And there are a number of these different choke points all around the world. Now, what’s specific about Hormuz and what’s distinctive about it is that it is the choke point where the quantity of oil that goes through is higher than any other commodity that actually flows across the strait. As you just mentioned, about 30% of the global oil flows through that. And part of the reason for that is, of course, that the world’s biggest oil producers — some of the biggest oil producers are all sitting around the Persian/Arabian Gulf, so Iran, Iraq, Kuwait, Saudi Arabia and Qatar, Abu Dhabi, which all are huge producers of oil in the first place, and then natural gas in the case of Qatar and Iran in the second place.
Now, what has been fascinating is that anybody who has one of these apps that you can put on your phone, like MarineTraffic or VesselFinder, you can actually take a look at the flow of traffic, the flow of vessel traffic, flow of ship traffic, through these different seas in the world. And if you zoom in on the Strait of Hormuz, what you’ll find is that instead of seeing actually a steady traffic of little usually pink or green arrows going through, which indicate tankers, what you end up seeing are major clusters of ships that are bunched up very near ports where oil is produced and usually put on ships. What that indicates is that, basically,........