THE plight of an Okada rider in Nigeria has brought into sharp focus, the impact of the ongoing war between Israel and the United States of America on one hand, and Iran on another, as well as its effects on global economy. The okada man set out on his daily hustle last week, looking for daily bread, but after working for several hours, he was back to square one, as there was nothing to show for his effort, no thanks to the skyrocketing price of Premium Motor Spirit (PMS), otherwise known as petrol.
His day, which began with a visit to a fuel station to buy N5,000’s worth, which could only get him only four litres, turned worse, when after working for just a few hours, the fuel got exhausted, and to his shock, he had only made N5,050. In essence, he made a profit of only N50 after over three hours of work. I don’t know how the bewildered man would present this wild goose chase as his reason for returning empty-handed to his wife and kids eagerly awaiting food at home.
The plight of the Okada rider mirrors what many average people across the world are currently facing. The war in the Middle East is having a devastating impact on global economy. The helpless Okada rider in Nigeria was not consulted when Israel and the USA launched their war against Iran. In actual fact, he is several kilometers away from the theater of the conflict, but its impact is telling on him. How is he going to explain to his wife and kids that the world economy is terribly impacted by a war going on over several kilometers away?
In several cities across the globe, the impact of the war is now being felt in various homes and cities. The price of fuel has risen above 30 per cent, and long queues are back at filling stations in some cities while some countries now ration fuel. If the war mongers had given their actions rigorous thought, perhaps, they would not have embarked on it.
As the war approaches its fifth week, global oil shortages is forcing countries to take severe measures to save their reserves as Iran continues to block oil shipments. While Israel and the US continue their bombardment of Iran, Iran is tightening the noose on the world’s economy by disrupting oil supply chains through the Strait of Hormuz. Even if the war comes to an end and a deal is reached today, unwinding the damage it has caused will take months. Even in the United States, gas prices have reached their highest level in years. The change in oil prices isn’t just impacting drivers alone, as Oil is used to power supply chains; from the machines that manufacture a cell phone to the diesel that powers a truck carrying it to a store.
The oil price increases come even as many Americans are already strained by rising housing costs, high grocery bills, and huge electricity statements. A Gallup poll released last week found that a third of Americans now skip meals and forego other needs just to afford their healthcare needs. Many are wondering whether they did the right thing by electing Donald Trump to office last year for another four-year term. His approval ratings have further plummeted since the war began. In the last few weeks, the average cost of gas in the US has jumped about 30% over the last month, with the national average hitting $3.97, the highest since 2023.
Even diesel, which fuels many of the trucks that transport goods across the nation, has increased further by about 50%, or about $1.69 more than it did a year ago. Higher diesel costs could soon affect transportation costs and, in turn, the cost of groceries, as roughly 85% of agricultural goods are transported by trucks.
In Asia, Africa, and the Middle East, developing economies are bearing the brunt of surging energy costs prompted by the closure of the Strait of Hormuz and attacks on oil and gas facilities across the Gulf region.
From Pakistan, to Bangladesh and Sri Lanka, through to Jordan, Egypt, and Ethiopia, policymakers are facing the double jeopardy of being both heavily dependent on imported energy, and having limited financial firepower to absorb the shock of spiking prices. In Pakistan, which imports about 80 percent of its energy from the Gulf and has lurched between economic crises for years, authorities have scrambled to roll out measures to conserve fuel.
Facing the depletion of the country’s petrol and diesel reserves within weeks, officials have closed schools, introduced a four-day working week for government offices, ordered half of the country’s public sector employees to work from home, and slashed fuel allowances for official businesses. Pakistani Prime Minister, Shehbaz Sharif, said last week that he had decided against a proposed hike in petrol and diesel prices before the Eid Al-Fitr celebration, saying that the government would “bear the burden” of rising costs. Sharif’s announcement came after the government had earlier this month approved a 55 rupee ($0.20) rise in the price of a litre (0.26 gallons) of petrol or diesel. While government subsidies have helped to cushion the blow for the public, there are fears that petroleum prices will surge and bring economic activities to a halt if the war drags on.
That explains why Trump is desperate to end the war. He doesn’t have much time. The political, economic, and geopolitical stress of the war is building every day. The moment is approaching when he will face the conundrum that has led predecessors astray from Vietnam to Iraq: whether to intensify a senseless war in a quest for a way out. And Trump desperately wants a way out. But the Iranian are not ready. They have insisted that they did not start the war, they would want to have a say on when and how it would end. Iran has lost much of its leadership and military leaders, but the people are resilient and are not yet ready to give the so-called superpowers the satisfaction of ending the war on only their own terms.
Trump has proposed a 15-points plan to end the war with the conditions that Iran gives up its plans to having a nuclear weapon, hand over its enriched uranium stockpiles, end regional proxy groups, and the reopening of the Strait of Hormuz amongst other demands. This is a clear indication that the war has slipped beyond Trump’s control. The Strait, which was open to all tanker traffic when the conflict began has now become a key US demand in negotiations. Trump kept insisting that the Iranians are talking to them and want peace, but Iranian leaders have denied entering into any negotiations with the US and have also come up with their own five-points demand.
Tehran is demanding a complete halt to all forms of aggression and assassinations of their leaders now and in the future. It wants concrete undertakings to ensure the war doesn’t resume, and the payment of war reparations, an end to Israel’s assault on Hezbollah in Lebanon, as well as the right to exercise sovereignty over the Strait of Hormuz. This would give the Islamic Republic a stranglehold on 20 per cent of the world’s oil supplies and the global economy. Iran has shown in the past that it is willing to talk about its nuclear programme, and has made it severally clear that it is not interested in having a nuclear weapon. In fact, it made a deal with the former US President Barack Obama to freeze the programme, which Trump tore into shreds when he came on board as President for his second term.
For this war to end, payments of huge sums of money may be required as compensation that might enable the shattered Islamic Republic to rebuild its military capacity. With the USA desperately seeking an end to the war, it may be forced to pay. Iran knows that it can’t win a conventional battle with the USA, but it is seeking to impose as much pain on the US through the strangulation of the world economy and Trump have no option but to retreat.
Having ran to most of his allies in Europe and many, if not all, turning their backs on him – indicating an indirect signal to him to end the war he started, Trump finds himself alone and forlorn.
In the next few months, the impact of the war on food supply will become manifest. This is because a third of global urea trade, which is a solid nitrogen fertiliser needed on most farms, passes through the Middle East region, with about 20 per cent of imported fertiliser to the US coming specifically from Qatar. Nitrogen fertiliser is critical to grow corn, which is cultivated by about 500,000 farmers in the US, according to the National Corn Growers Association. The war’s impact on farmers has caught the attention of the White House, which has promised that the US economy wouldn’t be disrupted “very much at all” by supply issues.
The conflict has also disrupted the global helium supply after Iranian attacks in Qatar, the second-largest producer of helium after the United States. The country was forced to halt production at its Ras Laffan industrial complex, which supplies about 20 per cent of the world’s liquefied natural gas. Helium is a key import that is used in aerospace, magnetic resonance imaging (MRI) and in making semiconductor chips that are used to power AI. Needless to say, America and some of its companies are in deep shit. (Do kindly pardon my French!).
Increases in oil prices has also resulted in higher airfare and shipping costs. Already, the price of jet fuel has doubled since the start of the war, according to the International Air Transport Association, while United Airlines has announced it would have to cut flights due to the surging cost of fuel.
Back home in Nigeria, the steady increase in the price of fuel has had a devastating impact on the purchasing power of most Nigerians, as food inflation, which has been on the downward trend in the last few months, have picked up again. When the war started, a litre of fuel cost N780. Now, the price ranges between N1,300 and N1,400 depending on the location. Consequently, labour leaders are calling on the Federal Government to urgently work out relief plans for workers to cushion the effects of the harsh realities on public servants.
The Oyo State Governor, Seyi Makinde, has belled the cat by approving N10,000 additional transport allowance for workers in the state. Aliko Dangote has also already canvassed the need for workers to work from home in order to reduce the impact of the cost of transportation on workers. Nigeria is several kilometres away from the war zone but still bearing the brunt, no thanks to a war monger who acted first before applying his critical thinking cap on the global consequences of war.
Nevertheless, President Tinubu should come up with measures that would bring succour to the people from the hardship brought upon by the war, and from a long history of economic turbulence in the country. He was elected to solve our collective problems as Nigerians and it is expected that he and his economic team would come up with solutions, and fast too.
See you next week.
- Akintunde is the Publisher and Editor-in-Chief of Glittersonline newspaper. His syndicated column, Monday Discourse, appears on News Point Nigeria newspaper on Monday.