Abhishek Vij
Despite the global community’s desire for peace, a peace agreement between the United States and Iran has failed to materialize. Efforts to secure a permanent ceasefire have, thus far, proven futile. True to form, the United States has once again rejected Iran’s latest peace proposal. The conflict between Russia and Ukraine has also been ongoing for a considerable period—a situation that disrupted global supply chains—yet that war did not impose such a crushing burden upon the global economy.
However, the nature of this conflict between the U.S. and Iran is distinctly different. The blockade imposed by both sides along the Strait of Hormuz has become a persistent headache for the entire world. At this juncture, continuing the war has devolved into a mere act of obstinacy.
On Saturday, Donald Trump declared, “We will not allow the ‘devilish’ Iran to build a nuclear bomb; we cannot place an atomic weapon in the hands of madmen. We will not permit the power of enriching precious uranium to remain in Iran’s possession.” Iran, for its part, remains adamant: “We will retain the sovereign right to enrich uranium and develop nuclear weapons.
However, if the United States lifts its blockade on the Strait of Hormuz, we, too, will reopen the passage.” There is a palpable apprehension that hostilities could erupt once again between the two nations. It is the United States’ objective to prevent Iran from exporting oil and gas to the rest of the world via this vital route, given that oil extraction and sales constitute the very bedrock of Iran’s economy. Should this vital economic activity be brought to a halt, Iran would face total economic ruin—leaving it with no alternative but to capitulate to the United States. We maintain that in conflicts of this nature, neither side can be forcibly brought to its knees.
The war in Ukraine against Russia continues to this day; yet, has Ukraine yielded? Has Russia succeeded in seizing control of Ukraine’s rare mineral resources? It has not. Moreover, Ukraine continues to receive military and financial assistance from Western nations.
The situation regarding Iran is remarkably similar. Iran has been receiving clandestine military aid from China. Furthermore, Iran enjoys the tacit support of Russia—a factor that has enabled it to hold its ground on the battlefield thus far. It has been over two months since the global supply infrastructure for crude oil and gas was thrown into complete disarray. The repercussions of this situation have now begun to manifest in Indian markets as well. Opposition leader Rahul Gandhi had warned that an “inflation bomb” would explode in India following the elections.
At the time, leaders of the ruling party vehemently dismissed this claim, asserting that the country possessed adequate reserves of crude oil and gas. But how long can one rely on such reserves?
Crude oil prices are currently at an all-time high. The price of crude—which stood at around $70 per barrel prior to the conflict—has now surged to $126 per barrel. With the conflagration of war continuing to rage unabated, not only have supplies of crude oil and gas become scarce, but fertilizers essential for agricultural use are also becoming increasingly difficult to procure. No sooner had the elections in five Indian states concluded than the prices of commercial gas cylinders shot up by Rs993, while the cost of smaller “Chhotu” cylinders rose by Rs261. Crippled by the burden of inflation, migrant workers have begun returning to their home states. The service sector and the hospitality industry, too, have fallen victim to the inflationary spiral and are facing ruin.
As the rising cost of aviation fuel cripples international airline operations, domestic flight schedules have also been thrown into chaos. While the government maintains that it has shielded the common man from the impact, reports suggest that the prices of petrol and diesel are also set to rise in the near future. All in all, this war has bestowed upon India—and the nations of the developing world—the dubious gift of economic instability.