By Nduka Uzuakpundu
Crude oil, it’s been, rightly, argued, is intolerant of crisis. It ranks first in that
conduct well ahead of diamond, cocoa and wheat. The last major global crisis
about diamond, called gems of war, was back in the late 1990s, during the Liberian
civil war. Then, the United Nations banned trading in diamonds sourced from the
Mano River basin, because they were being used to fuel the senseless, fratricidal
war in that once-peaceful country. Thereafter, the price of diamond became stable.
It was one of the major, telling and efficacious interventions – alongside peacekeeping operations – that silenced the din of war in that country.
Cocoa: until the war in neighbouring Ivory Coast, also in the late 1990s, which
found its roots in the first coup ever, in that country, by Colonel Robert Guei, to
the dislocation of economic activities and exodus of refugees to other Mano River
basin countries – Sierra Leone, Liberia, Guinea-Bissau, Guinea (Conakry), and
Ghana – was said to be cucumber cool. Throughout that brief, but sanguinary war,
the price of cocoa, in the international market, was astronomical. Since the end of
that war, Ivory Coast has been cool – as is her chief export and forex earner: cocoa.
Take wheat. Like the other products afore-mentioned, it has taken a crisis – the
criminal invasion of Ukraine by Putin-led Russia for some consumers to know that
(i) Ukraine is a leading producer of wheat – a major base for, biscuits, burger,
dough- nut, sausage, chips, etc. and (ii) for the price of loaves bread of diverse
shapes and size to soar by about 215 per cent, since the February 24, 2022
invasion. Therefore, South economies may have to bear the rebellious trend in the
price of wheat – perhaps in the short run, up to 2032. It would surely hurt many.
There’s hardly much that the global powers, like the United States of America,
France, Japan, Germany, India and China, for instance, would be able to do, in the
case of wheat, to force down its price in the global market until the Russo-Ukraine
war ends – and Moscow compelled to pay war indemnity to Kiev – as did defeated
Nazi Germany to Poland, for instance, after the Second World War.
The hurricane that assists this argument is that the world needs wheat- based bread.
The world needs bread, whatever happens, if only to remind Christians that Christ
in the filling bread of life! The United Nations needs an assuring reserve of wheat
to make bread for refugees wherever they may be in humanitarian intervention.
But seriously, the combined negative economic effects of the war – induced
dislocation in the price of diamond, cocoa and wheat, in the past four decades, is
obviously marginal compared to the crippling dent of the great oil embargo by the
Organization of Petroleum Countries (OPEC), in 1973, in protest against the
West’s backing for the Jewish State of Israel during her war with her Arab
neighbours late that year.
Then, oil price rose by more than 100 percent to more than $25 per barrel. Most
western economies groaned under that stratospherical price heave. Then, Nigeria
was awash with petro-dollar, such that Yakubu Gown – Nigeria’s young military
dictator – said that money was not the country’s problem but how to spend it.
In those days, Richard Nixon – the president of the United State of America, who
was almost neck-deep in the Watergate scandal – prophesied, with furrowed
brows, that a day shall come when OPEC member states, especially the Arabs,
shall quaff their crude oil.
It’s been fifty years, since the Arab oil embargo. In the intervening years, there
have been increases in the price of crude oil caused of the Persian Gulf War
between Iraq and Iran, and Iraq’s irresponsible invasion neighbouring Kuwait.
Currently, there is a cousin of genocide against Palestinians by the Jewish State of
Israel in response to Hamas’ invasion of southern Israel and taking of some Israeli
revellers as hostages.
Because the Hamas-Israel war was seen, initially, as an isolated issue of
nationalism and survival by the Palestinians and Israelis, respectively, it was
widely held – and firmly, too – that it was unlikely to cause a rude raise in the price
of crude oil in the international market. Is that still the case? No. And the reason is
this: while it’s true that the war has drawn back sustainable human development in
the Gaza strip by nearly three decades, in which, by the World Bank’s estimate,
about $195billion would be required, in the next two decades to reconstruct Gaza
to pre-war standard, the dynamics of the war is gradually assuming a complexion
of an all-Arab crisis: yet another spring, since the one of 2011-2013.
There’s a growing Arab and western sympathy for the Palestinian people in Gaza:
Poland, Germany and Turkey frown upon the Israeli genocide mission in the strip.
Antonio Guterres – the United Nation Secretary-General, too. He has blamed
Israel, indirectly, for the war. Hezbollah, in neighbouring Lebanon – in sympathy
with Palestinians – has, occasionally, fired missiles inside Israel. Iran, which
sponsors Hezbollah, has targeted some American positions in the Middle East:
Afghanistan and Jordan. The Houthi rebels, in Yemen, who are allies of Tehran,
have been annoying Washington target’s in the Middle East – in a show of deep
sympathy for Palestinians.
It’s widely feared that the Hamas-Israel war, which started on October 7, 2023 –
like the October war of 1973 – has, finally, laid the foundation for an astronomical
soar in the price of crude oil.
Between April and August 2024, it’s almost certain that Tehran would block the
strategic Strait of Hormuz, where passes about 27 percent of global oil supply. In
their deep sympathy for the Palestinians, the Mullahs have, since the fall of the
Shah, never recognized the Jewish State of Israel. It was in their sworn exportation
of their Ayatollah-directed revolution that they have planted Hezbollah in Lebanon
– solely to cross Israel and Washington.
If the Strait of Hormuz is blocked – even if for one day – today’s $76 price of
crude oil might soar to nearly $90. An Arab spring – in, say, July 2024, in a rude
protest against Israeli genocide against Palestinians – looks likely to topple some
of the conservative, oil-rich Arab sheikhdoms – the likes of Bahrain, the United
Arab Emirates and Qatar – that have established diplomatic ties with Israel.
The Hama-Israel war might force Israel to reconsider her plan to deny the
Palestinian people their right to an independent state of theirs; why, thirteen years
on, she has laid a choking and inhuman siege on Gaza and, since 1948, been
constructing illegal settlements in territories recognized by the United Nations and
international law as the property of Palestinians.
As most Arab capitals look certain to be rented by rippling crowd of protesters, in
solidarity with the Palestinian people, in summer, there might be a rebellious raise
of up to $105, in the price of crude oil. The same development might shake the
foundations of Egyptian politics to the extent of forcing an indefinite blockade of
the strategically important Suez Canal.
Expect an Arab armada there by green mariners, who might say that their rascally
move is to help the general wrong done to the Palestinian people by Israel and her
foremost ally – the United States of America.
As the blockade of the Suez Canal shrinks the amount of sorely-desired forex that
springs therefrom into Egypt’s treasury, so would it – for as long as it lasts – cause
a cousin of the 1973 Arab oil embargo to mainly the free enterprise democracies of
the West: the likes of the United States of America, Canada, Britain, France, Italy,
Germany, Sweden, Denmark, Iceland, etc. In that event, a reopening of the ancient
sea route to India, via the Cape of Good Hope, in South Africa, to access the
Middle East crude oil? Would that be the hugely costly economic trap – with a new
security architecture to fight piracy in the Gulf of Guinea and the international
waters off the coast of the Horn of Africa, and ambitious marine insurance fees –
that Hamas would have succeeded in laying for Israel and her western allies?
