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Louise Rasmussen, ReutersThe wealth tax on which Danish Prime Minister Mette Frederiksen is campaigning ahead of a March 24 election may appear modest: a 0.5% levy set at such a high threshold that barely 20,000
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Dogs tend to get a bad rap from people who are not dog people. Cat lovers are not fond of dogs and vice versa. I cannot call myself a dog person or a cat person.
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This was my first Ramadan in the UAE and I enjoyed a lot. The atmosphere during the Holy Month of Ramadan was very different. I never had experienced such an amazing atmosphere in 40 years
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When he joined Israel to launch a war on Iran, Donald Trump revealed he does not comprehend Iran, the Arabs and the region as a whole as well as Israel. Trump does not know that
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When monarchs fail to fight off the tyranny of stress, what are commoners? In the case of kings, it is authority that’s responsible for the stress (uneasy lies the head that wears the crown, wrote
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The 98th Academy Awards took place in Los Angeles, marking the end of this year’s awards season. This week we are taking a look at all the winners, some of the losers as well as
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On a moonless night in central India, Pannelal Rajak braces an axe on his shoulder and sweeps a high beam torch across the still, inky water of a lake. Rajak points in the distance to
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As the US-Israel war with Iran enters its third week, analysts warn it is severely disrupting fertiliser markets and endangering food security for developing countries in the near term.Here is how the conflict is affecting fertiliser costs, trade flows and output: Fertiliser production is energy-intensive, relying heavily on natural gas as a feedstock, with energy making up as much as 70% of production costs.As a result, much of the world’s fertiliser is made in the Middle East, with one-third of global trade in it passing through the Strait of Hormuz, a narrow shipping route along Iran’s coast that has largely been shut since the conflict began.Some 20% of the world’s oil and liquefied natural gas also transits the Strait, and its near closure, combined with missile and drone strikes across the Gulf, have forced regional energy facilities to halt output. That has, in turn, shut fertiliser plants in the Gulf and beyond, just as farmers across the Northern Hemisphere prepare for spring planting, leaving little margin for delays.About half the world’s food is grown using fertiliser, so prolonged supply disruptions would have major implications for food availability, according to Argus analyst Marina Simonova. In some countries, fertilisers account for up to 50% of the cost of grain production, and the UN’s food agency has warned that many low income countries were already suffering from food insecurity prior to the war.The most important fertilisers near term are nitrogen-based products like urea because, by and large, if a farmer doesn’t apply them for one season, yields will likely be hit. This is less so the case with other key products, like those based on phosphate and potassium. The global market for urea was already struggling with tight supplies prior to the current conflict, with Europe forced to cut output due to the loss of cheap Russian gas and China restricting fertiliser exports including urea in order to ensure domestic supplies.QatarEnergy has halted output at the world’s largest urea plant after shutting down gas output following attacks on its LNG facilities. In India, a massive global urea market, three urea plants have cut output as LNG supplies from Qatar have plummeted. India, home to nearly a fifth of the world’s population, buys more than 40% of its urea and phosphatic fertilisers from the Middle East, and recently agreed to buy 1.3mn tonnes of urea, some of which might not arrive on time.Bangladesh has shut four of its five fertiliser factories, while Australia’s Wesfarmers has warned of possible shipment delays, including for urea. Brazil is almost 100% reliant on urea imports, nearly half of which transits the Strait of Hormuz. In the US, farmers are reporting empty shop shelves, with the country about 25% short of fertiliser supplies for this time of year.Globally, urea exports are set to fall to about 1.5mn metric tonnes in March, compared to 3.5mn without China’s supplies, or 4.5 to 5mn with China, according to Scotiabank.Urea export prices in the Middle East have jumped about 40% to just above $700 per metric tonne last Friday from just under $500 before the war, according to Argus. In the US, fertiliser prices have surged as much as 32% since the conflict began. Analysts say prices for nitrogen-based fertilisers like urea could roughly double if the war drags on.Given the Middle East’s dominant market share, no producer can quickly make up for the lost supply, according to Chris Lawson, analyst at CRU. Russia, the world’s largest fertiliser exporter, is facing supply disruptions due to Ukraine drone strikes, while China, despite ample capacity, is restricting exports, he said. —Reuters
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The energy shock from the Iran war has policymakers around the globe rethinking ways to reduce long-term dependence on oil and gas imports, with proposals to expand nuclear energy and renewables, grow strategic stockpiles and domestic production, and diversify foreign sources of supply. Iran’s closure of the vital Strait of Hormuz shipping lane, after the US and Israel attacked on February 28, marks the third time this decade that an international energy shock has forced governments to reckon with the risks of a world dependent on the free flow of vast quantities of petroleum to fuel its economic engine. It has also stoked the view that the fossil fuel age must end, after pushback in recent years to ongoing efforts to mitigate climate change. “The issue of energy security has never been as acute as now. Until a few weeks ago, markets took Gulf resources for granted. That will not be the case going forward,” said Geoffrey Pyatt, who was assistant secretary of state for energy resources under Joe Biden and is now a senior managing director at US consultancy McLarty Associates. The world’s biggest energy consumer nations are now back at the drawing board: Europe last week unveiled new financial guarantees for atomic power after decades of closing nuclear plants. Other major importers are planning to source fuel from a broader array of suppliers to hedge their risk. In a timely article about a potential blockage to Hormuz, a department within China’s state planner, which shapes the country’s economic strategy, said on the first day of the war that the country should accelerate its renewable energy transition, as well as expand its emergency reserves and source more energy from alternative suppliers. “Not only China, but around the world,” governments “will reconsider their energy supply lines and production systems and perhaps pay more attention to nuclear and clean energy,” Wang Jin, senior fellow at the Beijing Club for International Dialogue, a think tank under the purview of the foreign ministry, told Reuters. China is already the world’s leading source of clean energy technologies. In the shorter-term, big consumer nations have opted for a record-sized coordinated release of emergency stocks, along with requests by governments - particularly in Asia - for consumers to conserve energy. Around 20% of world oil and liquefied natural gas supply has been blocked after Tehran effectively locked down Hormuz - the main artery for Middle East fossil fuels headed to world markets. The International Energy Agency has called it the worst disruption to global energy supplies in history. Global crude oil prices have surged to above $100 a barrel. The crisis follows two previous major energy upsets of the 2020s: Russia’s 2022 invasion of Ukraine led Europe to slash its dependence on Russian imports; and the 2020 Covid-19 pandemic that triggered a sudden, massive decline in world demand for fossil fuels followed by a rebound that world’s top producers were ill-prepared to meet. Both shocks contributed to a sustained rise in inflation. ASIAN DEPENDENCEAsia sources the vast majority of its oil and LNG imports from the Middle East, making it the region most affected by both higher prices and physical supply disruption caused by the Iran conflict. Cuts to oil and gas shipments have led refineries in Singapore and Malaysia to reduce output and petrochemicals firms in Japan and Taiwan to cut supply to customers. The issue has revived support in some corners for nuclear energy as a way to reduce regional reliance on power fueled by natural gas and other fossil fuels. In Taiwan, economy minister Kung Ming-hsin said on March 11 the island is considering restarting its last nuclear station, which closed in May, after the main opposition party lambasted the government following the start of the Iran conflict for phasing out nuclear power. Around one-third of Taiwan’s LNG supply comes from Qatar, whose production has been cut by the fighting. Tokyo had already been discussing the restart of reactors idling since the 2011 Fukushima disaster, as Japan looks to reduce the country’s large dependence on energy imports. But politicians have called on Prime Minister Sanae Takaichi to do more to boost the industry since the start of the Iran war. Taiwan’s economy ministry said the use of nuclear power must be premised on ensuring nuclear safety. Taiwan will continue the expansion of renewable energy and natural gas storage facilities to increase safety reserves, it said. Japan’s industry ministry did not reply to a request for comment. In China, the world’s top buyer of Iranian oil, refiner Sinopec has cut processing runs at its refineries in the country by 10%. Beijing has also banned fuel exports to help avert domestic shortages. China has, however, been relatively insulated from the crisis due to its ample emergency oil reserves and high rate of electrification, with EVs representing more than half of its domestic new car sales and its grid more than 50% powered by renewable energy sources. In the US, by comparison, EVs are less than 10% of the market, while renewable power is around a quarter of the nation’s electricity generation. Jin, of the Beijing Club think tank, said China saw the Iran crisis as an opportunity to create new avenues for co-operation, and that Beijing sought friendly, stable energy relations with all producers. China’s foreign ministry declined comment and the National Development and Reform Commission did not respond to a request for comment. Government officials and company executives in Japan, Taiwan, Bangladesh and Pakistan have said they also plan to diversify their import sources and buy LNG on the spot market, instead of relying on long-term contracts from the Middle East. “A STRATEGIC MISTAKE”The cost of the EU’s fossil fuel imports, meanwhile, has risen by 6bn euros since the start of the war, putting massive upward pressure on the continent’s power prices. Being “completely dependent on expensive and volatile imports” of fossil fuels puts Europe at a structural disadvantage to other regions, European Commission President Ursula von der Leyen said in a March 10 speech, while putting forward a new program to offer a 200mn euro guarantee for private investments in innovative nuclear technologies. Reducing the share of nuclear in the overall mix of power supplies in Europe over the past 25 years “was a strategic mistake,” von der Leyen said. EU member states led by Germany had shut down nuclear plants in recent decades amid worries about accidents and radioactive waste, reducing generation to a 15% share of the trade bloc’s total from about a third in 1990. To shield residents and businesses from spiking power costs, the European Union is drafting changes to its carbon market to try to curb CO2 prices, alongside state aid measures like subsidies and tax breaks. RUSSIAN PERKSThe United States is less concerned about domestic supply shortfalls, given it is the world’s largest oil and gas producer and sources only a small amount of its imports from the Middle East. But its government is focused heavily on ways to tame global energy prices while conducting the war. Consumer price inflation is a key vulnerability for President Donald Trump and his Republicans leading into November’s midterm elections. As part of efforts to do that, the Trump administration has eased sanctions on Russia to allow other countries to purchase more Russian oil, marking a partial reversal of Washington’s previous efforts to curb Moscow’s oil revenues to fund the war in Ukraine. The Iran crisis may also prompt a reassessment of western sanctions on Russian LNG, according to analysts, as the EU and Asian importers struggle from the loss of supply since the onset of the conflict. LNG makes up 45% of the EU’s total gas imports, up from 20% in 2021, before the 2022 Ukraine war led European nations to replace Russian pipeline gas. “EU politicians are back on the backfoot,” said a gas trader at Vitol, a commodity trading house. “This looks like 2022 all over again.” The EU’s ambitious plans for green energy could eventually limit its exposure to disruptions like the one triggered by the Iran war. But it also risks building a new dependency on China, said Bart Groothuis, a member of the European Parliament and vice-chair for the delegation for relations with Iran. “We will not be subjugated to the will of Vladimir Putin and his gas anymore, or geopolitical instability in the Middle East,” Groothuis said. “We’re building new dependencies and new problems inside our energy infrastructure by building dependencies, total dependencies, on Chinese hard and software.”
