War Impact On Global Growth Fuels Recession Fears

追加: 2026-06-01

[00:00:02]global economic perspective, how dangerous is the prolonged disruption in the Strait of Hormuz for international trade, inflation, and supply chains, especially when the IEA is calling it the biggest threat to energy security in history?

[00:00:17]>> We are entering into uncharted territories. This is the worst oil shock that the world has experienced in the last 50 or 60 years since oil became the preeminent source of energy as well as an input into many other parts of the industrial economy across the world. We are going to experience, I think, increasing upward pressure on prices without a doubt, and uh and that will lead to disruptions in supply chains as um production systems across the globe begin to experience shortages, and ultimately um we are going to see certain degrees of demand destruction.

[00:00:54]The extent to which that demand destruction will be permanent or temporary will be something that we'll need to watch very, very closely, but there is no doubt that the world is in for a significant shock, and we are only at the beginning of the process.

[00:01:10]>> Usama Rizvi, coming to you. Fertilizer and urea prices have surged sharply due to the disruptions in the Strait of Hormuz. How serious could the impact become for Pakistan's agriculture sector and food prices in the coming months?

[00:01:23]>> So much for having me today. I think in terms of fertilizers, I'm glad to share that Pakistan is almost self-sufficient in what we produce and what we need. Uh but there is a part of it called the uh DAP, diammonium phosphate, uh that um you know, around which uh 0.7 million tons of production depends, uh and we need it around 1.4 or 1.5 million tons every year. So, that is the part where we are vulnerable. Apart from that, we're not uh particularly vulnerable uh for the fertilizer disruptions, supply disruptions, but uh rather the LNG or the feedstock that goes into producing these fertilizers, 30% of Pakistan's fertilizers fertilizing producing plants are depend upon imported RLNG. So, I think there is a bit bit of a mix and match here. We are dependent We are vulnerable on this end, but this is much better as compared to the other things such as LNG or oil prices.

[00:02:17]>> All right. I mean, it's it's interesting, but the fact to me is also that a lot of other economies are even more vulnerable than Pakistan's economy, and this is what needs to be taken into account when it comes to conflict such as the this US-Iran conflict. Dr. Warwick Powell, the CPEC oil output has fallen to In fact, let me rephrase that.

[00:02:36]The OPEC oil output has fallen to its lowest level in more than two decades, while oil inventories are shrinking rapidly. Now, are global markets underestimating the long-term economic consequences of these crises, whether they be OPEC countries or non-OPEC countries?

[00:02:52]>> Look, I think they are underestimating the extent to which we are going to experience supply shocks. The The financial markets or the paper oil markets are responding to signals at the beginning and at the at the end of each week, and in many ways are jumping around, but largely being held to hover around that $100 a barrel mark. But once you get back into the real world, when buyers and sellers are engaging with each other in relation to actual barrels of oil, the price of oil is already well into the 150 160 dollars a barrel, and in fact, in parts of the world such as in Southeast Asia, it's even more than that. So, I think we are at the beginnings of a process where the depletion of the reserves, as you mentioned, coupled with the overall reduction in total global supply by roughly about 10 million barrels a day. So, we're talking about 8 or 9% of total global supply has been reduced. That's going to have an impact. The last thing that's worth recalling in all of this is that whilst we often talk about oil in a very generic or an abstract sense, the reality is is that different kinds of oil from different parts of the world are necessary to produce different kind of refined products. And the kind of oil that we get from the Middle East is particularly suitable for the production of diesel, which of course is pivotal to most economic systems around the world.

[00:04:22]And and you cannot simply replace that with the with the oils from other parts of the world, including the oil from the United States of America. So, we're looking at tightening supply conditions for crude oil in general, even tighter supply conditions for the medium sour crude from the Middle East, which will impact diesel. And ultimately through that, we're going to start to see supply constraints in the real economy rather than in the paper oil market.

[00:04:55]>> I mean, that is what we are looking at, the real economies and how they are being impacted. And also the economies of the developing countries that are of course the most susceptible when it comes to this. Osama Rizvi, markets in initially had reacted positively to reports of progress in the US-Iran talks, but analysts still warn that the Brent could surge beyond 115 US dollars if the you know, these tensions escalate again.

[00:05:18]Now, are the investors in your becoming dangerously complacent about geopolitical risks of this very conflict?

[00:05:26]>> Well, that is a very interesting question. And I would like to highlight towards the physical versus the paper market distinction as very rightly explained by my colleague.

[00:05:36]I think when you look at the money managers or hedge fund managers, we look at the positions, total positions taken right now. So, the long positions where they expect oil prices will go higher.

[00:05:48]They stand anywhere between 5,000 to 6,000 versus the short positions where they expect that oil prices will fall are anywhere between 45,000 to 48,000.

[00:05:58]So, you see that there is a huge tilt in the paper markets and which can be categorized as ultra bearish. But when we look at the physical markets, I've been talking to people in Middle East in Fujairah in different ports and loading docks of the world. There is still an actual shortage of physical oil even right now as we speak. The traffic through Hormuz is down still by 90 to 95% compared to the February 28 level before that. So, I think this divergence will only get worse. But realistically, the chances of oil prices rising from this point are higher than oil prices going down as of today. This can change of course and we all hope this can change. But this is where we stand today.

[00:06:40]>> All right. We stand today in an era of divergence and of course different values of how susceptible or not are different economies as a result of this conflict. Uh Dr. Powell, the United Nations and the World Bank are warning that soaring fertilizer prices could push tens of millions into hunger. Could this conflict ultimately trigger a global food security crisis similar to or worse than the aftermath of the Ukraine war? Because whether it be the IMF, whether it be the World Bank, they are all highlighting uh the importance of the food insecurity that is uh you know, eminent as a result of this conflict.

[00:07:18]>> Look, absolutely. I think it's important to not underestimate the risks that the current oil crisis is posing to global food security, particularly in poorer countries, which um many of which are already being impacted by the shortage of fertilizer or the rising cost of fertilizers. But of course, it's not just the developing world that is being impacted. We're also seeing major export sectors, agricultural export sectors in the United States being impacted by rising costs, which are putting incredible financial pressure on agricultural producers in that country, which ultimately affects global supply.

[00:07:56]So, as I said, it's important to not underestimate the risks that we currently now face in terms of global food security, and the world actually, and the major countries and major food producers really do have a responsibility to come together and identify how it is that they can better coordinate what they do do and what they do have to ensure that the food crisis is minimized and that people around the world are not exposed to um to the risks of hunger and worse of course than that um death from malnutrition.

[00:08:29]>> You said that food risks need to be minimized, but the fact it means that there are so many factors that are contributing towards in fact the opposite. Osama Rizvi, the United States says that the sanctions on Iranian oil exports are necessary for security. Iran argues that it will block its economic warfare. Do you see any realistic middle ground between Washington and Tehran on oil exports and the sanctions relief, or is there no middle ground?

[00:08:54]>> Unfortunately, I do not see any middle ground, especially when it comes to the Strait of Hormuz. You see, uh recently there has been uh some interesting developments where Iran has now started to reframe what they called as the Tehran toll booth uh tax, then they reframed it as insurance called the Hormuz uh safe, and now they are calling it somewhat related to environmental taxing or taxation or carbon law. I mean, there are all sorts of names to it, but the fact that the um US or rather the uh other countries dependent upon Hormuz for their energy imports, they will not be able to accept um policy thing or the fact that Hormuz is now under control of Iran, which remains, according to them, a very unstable country. So, this is the point of contention along with the nuclear enrichment bit. So, I believe there has to be some sort of diplomatic understanding on the passage of Hormuz.

[00:09:50]What I believe is going to happen moving forward is that, whether we like or not, Hormuz is going to come under the influence of Iran, as we just saw, and oil deliveries and the tanker markets are essentially going to inherit long-term geopolitical risk premium, wherein countries like Pakistan and others are going to pay more for oil, even if the oil prices fall down, because the insurance premiums or the delivery cost is going to high go high and remain high for the next few years.

[00:10:21]>> Now, it's somewhat interesting that you talk about diplomatic prowess, because Dr. Powel, China and many Asian economies are trying to cushion the shock through reserves and subsidies. Do you believe Asia is more resilient today or more vulnerable because of its heavy dependence on Gulf energy supplies, or are there more factors that are contributing?

[00:10:42]>> Look, speaking about China, the first thing to say is that it has generally weathered this particular storm particularly well, in large part because it has been preparing for this kind of risk really for over 20 years, going back to 2003, when then President Hu Jintao talked about the Malacca dilemma, right, which was all about the potential risk of having supplies of oil interdicted by the Americans.

[00:11:09]In response to that, China's embarked on a multi-pronged, multi-year strategy to transform the energy composition of its economy to a point now where oil itself is a relatively small proportion of its overall energy mix, an important one, but nonetheless a diminishing one, and that oil from the Middle East is also a relatively small part of that is diversified, it's oil sources to a point where the Russians are actually able to more or less fully compensate for the shortfalls that are being experienced as a result of the Strait of Hormuz situation. That's the first point to make. The second point to make is that China itself has actually been reducing its demand on global oil ever since the attack on Iran took place. And that has played a very positive role for um global oil buyers because if China was buying at the same levels that it was buying prior to the 28th of February, it would uh create a significant upward pressure on global oil prices. It's been doing the reverse. So, in a sense, it has been uh drawing perhaps on some of its reserves, which by the way are actually not well understood globally.

[00:12:23]Uh the estimates seem to have been a little bit short of where China's actual reserve capacity is. Um but China has been contributing to stabilizing spot prices in the marketplace today by tempering its uh current demand uh position in in the global marketplace.

[00:12:45]>> All right. So, a lot of uh different opinions as far as the marketplace is concerned. But to summarize is we from Pakistan's perspective, how worrying is this crisis when countries like Pakistan, Bangladesh, or Sri Lanka are already described by S&P as the most vulnerable to rising fuel and LNG costs?

[00:13:03]>> Well, uh that's a very interesting point to make. And uh I you know, there's a spectrum to this crisis. Some countries are on the uh disproportionate uh side of the spectrum, such as Pakistan. Pakistan actually being one of them. I would rather argue being the top of them. Uh what we see right now, look at what is IMF saying uh regarding Pakistan's outlook. We we were doing really well in the first 7 to 8 months of this fiscal year.

[00:13:29]Our inflation was down back in single digits where the 4 or 5%. We import of machinery by the industry was up. The development projects was also up, but what is happening right now is that by June or by by July essentially, we would see a return of the double digit inflation regime, 10%, 11%, 12%. Then it would have further domino effect. The interest rates that were at its highest point, 22% in the recent few months and only started to go down, we will once again, unfortunately, see them going up.

[00:14:03]As such, we will have what is called a contractionary monetary policy, a contractionary fiscal policy, which of course is the upcoming budget, and which means that the overall toll on GDP is going to be anywhere between 1 to 2%. We already have a downward estimates where Pakistan's GDP is expected to grow anywhere between 1.5% to 2.3%. That is one side of it. Then comes the economic cost of living crisis for people like us, for the common man.

[00:14:29]Inflation continues to increase, the dollar will continue to increase, the debt servicing will continue to increase, remittances will fall. It's a whole sort of array of things that will happen. Hopefully, it will not be as worse as I've just described it, but these are the eventualities that we would or should be looking at to plan it properly.

[00:14:50]>> All right, a lot of eventualities that could happen in case this conflict goes one way or the other. But Dr. Warwick Powell, the conflict has also exposed risks to digital infrastructure, including submarine internet cables passing through the Strait of Hormuz.

[00:15:03]Are, in your point of view, we now witnessing the expansion of economic warfare into the digital domain as well?

[00:15:10]>> Well, the digital domain, of course, has already experienced certain kinds of warfare, particularly in the information space over the course of the last so many years. And And seen this actually from the from the emergence of American weaponization of the digital domain, not only in terms of information itself, but in terms of the payments infrastructure, the ways in which the United States has imposed sanctions through its control over the digital infrastructure of the globe. A fantastic book written a couple of years ago by a couple of American researchers called Underground Empire really exposed the extent to which the United States government particularly its security apparatuses have over the last 20 years weaponized its control over the physical and software infrastructure environment.

[00:15:59]Now, insofar as the cables that go through the Strait of Hormuz, obviously there's been some talk about those being targeted should escalation take place.

[00:16:11]I'd hope that it doesn't, but of course uh in in the context of a what what is in effect a war of survival, from Iran's point of view, these would be acts of national defense and justifiable acts of national defense with significant global implications. And this is why I think it's vitally important that the world is mindful of firstly what the root causes have been of this particular conflict and ultimately who bears responsibility for these kinds of disruptions. The challenge going forward is of course that if diplomacy fails, and I think that there's a good chance that it will fail between now and the midterm elections in early November, then anything is possible including these the digital infrastructure assets becoming part and parcel of the of the conflict and that's going to add another layer of disruption to global supply chains and the global economy.

[00:17:17]>> All right. You know, there's such a lot of uncertainty when it comes to the current situation from an economic point of view or diplomatic or political point of view that of course the questions that are arising are quite genuine. Osama you see markets initially reacted positively to reports of the progress in US Iran talks but analysts still want Brent could search beyond $115 if these tensions escalate.

[00:17:40]Now, are we becoming dangerously complacent about geopolitical risks of this very conflict?

[00:17:49]Are the investors becoming dangerously complacent? I mean, I'm not just talking of the people. I'm talking also of the investors and of course the those people who are running the global economy as we speak.

[00:18:02]>> Well, as I just described previously, I think we have to look at it from the angle of the market positions both physical markets and paper markets. In the paper markets, we have seen that the long positions are 5,000 or 6,000 whereas the short positions are 48,000 47,000 which means that markets are expecting at least the paper markets oil for a bearish expecting for oil to go down and has a bearish tilt. Whereas the physical markets, they are facing considerable significant on the ground actual real time shortages of oil loadings. It's not only the 10 It's not only the 15 to 20% of the oil that passes through or moves that is missing. It's also 9 to 10 million barrels of oil production has been offline because of the strikes on the energy infrastructures recently. Furthermore, because of these blockages and Middle Eastern tensions, we are seeing that many producers are you know, cutting down on their productions because the storage tankers are filling up quickly and they don't have anywhere to go until the Iranian blockade and the US blockade it goes away. So, there is an element of complacency but as you know, we discussed previously, China has reduced their imports from 11.4 million barrels per day to somewhere around 8 million barrels per day, expected to go further down. We have seen a surge in exports from the Atlantic Basin. So, these two factors have also helped to balance the physical markets as well. Where will this lead to? Much depends upon what will happen next week and whether we will see a deal or not.