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War and oil
(Kaieteur News) – War is usually a shot of adrenalin for oil prices. A boost was given to sagging oil prices with the outbreak of widespread hostilities in the U.S.-Israel and Iran war. The longer this war rages, the greater the intensity and destructive power unleashed by the combatants, the more the rise in oil prices is prolonged. The rise is steeper, and it has some good in its movement, and much about it that is bad.
Oil producing nations stand to benefit through a surge in revenue collections. But the price can also be great. The specter of inflation becomes more pronounced, and the fight to ride that tiger loses its grip. Because oil and oil related products are linked to so many vital components of modern life, as prices of the precious commodity go, so go the prices of many of the thousands of oil-derived products. From medical supplies to transportation equipment to fertilisers to road construction ingredients to everyday products used in the home, the fallout is common. Higher prices have to be paid, and when that happens the pinch of inflation is felt more deeply.
Guyana should collect more for its oil, with daily production ramping up, and no oil lanes in trouble around this region. On the other hand, prices in Guyana are already an issue of considerable severity. The government has its calming inflation statistics, but Guyanese are the ones who are forced to deal with reality that doesn’t spare, with the poor lashed mercilessly. When prices spiral and spiral, after a time there is only so much purchasing power that the poorer sections of a country have in hand, which means there’s only so much that those struggling citizens can buy. Though needs are urgent, higher prices knock those citizens out of contention. Some parts of the economy would still move forward, but businesses and consumers will experience the pain of less demand, and less in hand to fill family demand.
War is good news for oil prices, and open warfare, and more covert elements of war, in the Middle East could extend indefinitely. The odds are high that more participants could be drawn into the raging conflict. The Iranians may not be able to mount a counterattack that matches their adversaries with missile for missile, or damage for damage. What they have done to date is to show that their assets for war are many and they are deep. In addition, there’s the willingness to stand and fight, alongside which the expected widespread civil uprising in the streets of Teheran and in the provinces has not shown its head.
Similarly, there seems to have been some anticipation in the U.S.-Israel bloc that internal upheaval at the higher levels of the Iranian governance system would have been triggered by the devastating strikes. So far, nothing of the sort has been seen. If there is anything to be said, it is that the Iranian High Command, both political and military, was already watching suspected weak links, and were ready to put them out of commission. One senior Iranian official has since been fingered and his movements curtailed. From all appearances, though Iran has absorbed some heavy blows, including the loss of its spiritual head, it still has a huge amount of fight left in it. We at this paper get the impression that a coiled snake has been poked and stirred into action. The forecast is grim, with the war that has been started gaining strength, and the release of new resources into the battle by the day.
All this is great for oil. Oil futures are up, oil traders are set to have good days in the next few weeks, at least. In commodities, such as oil and gold, the more volatile prices are, the happier the professional oil watchers and oil gamblers are. Under most circumstances, war is not a good development, should be the last resort, and then only for the most justifiable of reasons. Though geographically distant, the impacts of the U.S.-Israel and Iran war will be felt in Guyana in more than one way. The last development that hard-hit Guyanese need is having to deal with the higher prices that accompany war.
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- Editorial, Iran, oil, Oil prices, war
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