As oil prices surge and key shipping routes face disruptions due to the ongoing conflict in the Middle East, the cascading effects are now impacting diverse markets globally. From essential commodities like pistachios and bananas to luxury leather goods, industries worldwide are grappling with fractured supply chains and escalating costs, forcing them to adapt to a new economic reality.<\/p>\n
The war in the Middle East is exerting upward pressure on pistachio prices, which were already elevated following two consecutive years of declining production in the world’s three largest producers: the United States, Iran, and Turkey. This comes amidst a rising demand from the food manufacturing sector and the luxury chocolate market, exemplified by the popular pistachio-filled Dubai chocolates.<\/p>\n
Iran, a significant supplier accounting for approximately a third of global pistachio exports, particularly high-quality shipments to the European Union, has seen its exports hampered by blockages in the Strait of Hormuz.<\/p>\n
Jos\u00e9 Guti\u00e9rrez Fern\u00e1ndez, a nut and spice market analyst at S&P Global, notes that while partners in the EU and the UK currently hold pistachio stocks, further supply challenges could emerge if these reserves are not replenished promptly.<\/p>\n
In this scenario, Turkey stands to benefit, potentially stepping in as a crucial supplier, especially for the Middle East market.<\/p>\n
Ecuador, the world’s leading banana exporter, is confronting a dual challenge: a shortage of shipping containers and increased maritime fuel surcharges. According to Acorbanec, Ecuador’s banana marketing and export association, as reported by Bananaexport, over 2.5 million 18-kilogramme boxes of bananas have been delayed. This represents a substantial blow for a nation that typically exports between six and seven million boxes each week.<\/p>\n
While a five percent increase in demand might mitigate some of the impact, the sector remains highly susceptible to the volatility of rising oil and gas prices.<\/p>\n
Denis Loeillet, an economist specializing in the banana sector at CIRAD (France’s centre for agriculture and development research), aptly describes bananas as “essentially transformed oil.” This highlights the energy-intensive nature of their production and transport, encompassing everything from fertilizer use to the ripening process \u2013 bananas are ripened post-shipping before reaching points of sale \u2013 and packaging.<\/p>\n
Shipments of avocados from Kenya, the world’s third-largest exporter, experienced a drastic reduction by half in late March compared to the previous year. This decline is attributed to a significant increase in transport times to European ports, which have jumped from 30 to an alarming 50-56 days. The delays stem from disruptions at Oman’s Salalah port, which sustained damage from recent attacks.<\/p>\n
Eric Imbert, a CIRAD researcher, describes Kenya’s avocado sector as “a region full of promise” that had built considerable market credibility in recent years. This setback is therefore a major blow. With advancements in farming techniques and improved organizational structures, the quality and export readiness of Kenyan avocados had significantly improved, positioning them in direct competition with Peru, a major exporter to Europe during the summer months.<\/p>\n
Given the current slowdown, Kenyan producers may be compelled to pivot towards processing avocado oil, a less profitable alternative, according to Imbert. Another viable option could be to explore the Turkish market as a gateway to Russia.<\/p>\n
Neighboring Tanzania, while exporting smaller volumes than Kenya, is faring better, having successfully negotiated duty-free access to India.<\/p>\n
In contrast to the Ukraine war, the Middle East conflict has not triggered a surge in grain prices. After a brief uptick, prices for wheat, maize, and soy have largely stabilized near pre-war levels, thanks to abundant global supplies. Furthermore, demand from Middle Eastern importers remains subdued, as many countries had proactively stocked up before the conflict escalated.<\/p>\n
However, rising oil costs continue to influence prices. Arthur Portier, a consultant at Argus Media France, emphasizes that “the correlation is quite strong.”<\/p>\n
The more significant threat emanates from potential fertilizer shortages. Nearly 30 percent of global exports of urea, a vital fertilizer derived from natural gas, originate from the Middle East, particularly Iran, Qatar, and Saudi Arabia. Shipments have been stranded due to the closure of the Strait of Hormuz, and attacks on energy infrastructure have further disrupted production.<\/p>\n
Qatar, home to the world’s largest urea plant, halted operations in March following drone strikes. India, the region’s primary fertilizer buyer, is now actively seeking alternative sources in Egypt and Nigeria. Should fertilizer prices continue their ascent, farming costs will inevitably follow, and global food prices could soon feel the ripple effect.<\/p>\n
The closure of the Strait of Hormuz has severely impacted the supply of sulphur and sulphuric acid, both indispensable for refining critical metals such as copper, nickel, and cobalt. The Middle East accounts for 40 percent of global exports of these materials, yet no cargo has departed the Persian Gulf since mid-March.<\/p>\n
According to market analyst Kpler, over 510,000 tonnes are currently stranded on ships awaiting passage through the Strait. Bloomberg reports that China, the world’s second-largest producer, will cease sulphuric acid exports from May to prioritize its domestic fertilizer requirements.<\/p>\n
Other suppliers, including Japan and South Korea, along with a few European exporters, might capitalize on this situation. However, none are expected to fully compensate for the shortfall, making Chile, the world’s foremost copper producer, particularly vulnerable to the most severe impacts.<\/p>\n
The luxury leather market is experiencing a downturn as demand from the Middle East wanes. While India and China lead in raw leather production, France and Italy dominate the high-end goods segment, including clothing, shoes, and accessories.<\/p>\n
Philippe Gilbert, director of the economic observatory for Alliance France Cuir, France’s leather industry trade federation, states, “France is the fourth-largest exporter of leather products, after China, Vietnam, and Italy. French craftsmanship is in high demand globally. That is why French items are in such high demand internationally.”<\/p>\n
However, Gulf clients, traditionally key drivers of growth for the luxury sector, have significantly reduced their purchases since the onset of the war. Leading luxury brands LVMH and Herm\u00e8s reported sales drops of 50 percent and 40 percent respectively in March.<\/p>\n
Despite this, Gilbert asserts that “the sector remains resilient,” with a strategic shift in focus towards the robust markets of Asia and the US.<\/p>\n
This article was adapted from a series of reports from the French podcast Chronique des mati\u00e8res premi\u00e8res by Marie-Pierre Olphand, Nicolas Feldmann and Agnieszka Kumor.<\/em><\/p>\n #MiddleEastConflict #GlobalEconomy #SupplyChainDisruption #PistachioPrices #BananaExports #AvocadoMarket #FertilizerShortage #SulphurSupply #LuxuryGoods #TradeImpact<\/p>\n","protected":false},"excerpt":{"rendered":" As oil prices surge and key shipping routes face disruptions due to the ongoing conflict in the Middle East, the cascading effects are now impacting diverse markets globally. From essential commodities like pistachios and bananas to luxury leather goods, industries worldwide are grappling with fractured supply chains and escalating costs, forcing them to adapt to […]<\/p>\n","protected":false},"author":2,"featured_media":10342,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"class_list":["post-10341","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-middle-east-news"],"_links":{"self":[{"href":"https:\/\/fajr.news\/index.php?rest_route=\/wp\/v2\/posts\/10341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fajr.news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fajr.news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fajr.news\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fajr.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10341"}],"version-history":[{"count":0,"href":"https:\/\/fajr.news\/index.php?rest_route=\/wp\/v2\/posts\/10341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fajr.news\/index.php?rest_route=\/wp\/v2\/media\/10342"}],"wp:attachment":[{"href":"https:\/\/fajr.news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fajr.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fajr.news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}