Economics

The Strait of Hormuz has become the central pressure point in the escalating confrontation between the United States and Iran. Before the conflict, roughly 20 million barrels of oil moved through the narrow waterway each day, equivalent to about one fifth of global oil consumption. For years, traders could therefore rely on relatively consistent estimates of the volumes passing through one of the world’s most important energy corridors.

That certainty has now disappeared.

The use of “dark crossings,” in which tankers switch off their identification and navigation systems, has made vessel movements increasingly difficult to monitor. Satellite imagery, port records, tanker drafts, loading schedules and shipping data are being used to reconstruct movements, but the information remains incomplete. Recent estimates of Hormuz flows have differed dramatically, leaving traders and governments uncertain about the true scale of oil moving through the waterway.

The uncertainty comes as Brent crude has moved above the $100 a barrel threshold for the first time since July, driven by renewed military escalation and concerns over Middle Eastern oil supplies.

The Hormuz Information Gap

The most unusual feature of the current oil crisis is not simply that supplies may have fallen. It is that markets cannot confidently determine how much oil is actually moving.

U.S. Energy Secretary Chris Wright said more than 17 million barrels crossed the strait on August 31 under U.S. Navy supervision. Shipping intelligence firm Kpler, however, estimated that only around 6 million barrels crossed that day. Kpler put average August flows at approximately 4.3 million barrels per day, with flows rising to nearly 5 million barrels per day during the first days of September.

The difference could partly reflect different methodologies, including whether shipments using alternative routes outside Hormuz are included. Tankers that remain invisible to tracking systems for days or even weeks make the picture even harder to reconstruct.

This means that traders are attempting to price global oil supplies without reliable visibility over one of the world’s most important supply arteries.

Why the Strait of Hormuz Matters

Hormuz is strategically important because of the enormous concentration of energy exports that normally pass through it. Any sustained disruption can affect crude supplies, tanker availability, insurance costs and shipping times, eventually feeding into fuel prices and broader inflation.

The current situation is different from a straightforward blockade. The strait has not necessarily become completely impassable. Instead, its reliability has been severely compromised.

That distinction matters because a tanker does not have to be physically prevented from crossing for markets to react. The possibility that vessels may be delayed, attacked or unable to cross safely is enough to increase the cost of transporting oil.

As a result, the market is responding not only to actual supply losses but also to the risk of future disruption.

Iran’s Strategic Leverage

Iran’s ability to disrupt maritime traffic remains an important source of leverage despite indications that its military capabilities around Hormuz have been weakened.

U.S. demining operations and a growing U.S.-protected shipping corridor along Oman’s coast have allowed more vessels to enter and leave the Gulf. At the same time, Iran-linked forces continue to threaten commercial shipping, meaning Tehran retains the ability to create uncertainty even if it cannot completely shut down the waterway.

This gives Iran a form of asymmetric leverage. Tehran does not necessarily need to close Hormuz completely to impose economic costs. Sporadic attacks, warnings or restrictions can increase insurance premiums, delay shipments and encourage traders to price in a greater possibility of supply disruption.

The renewed attacks on Saudi energy infrastructure have added another layer of risk by threatening alternative routes that have become increasingly important as traffic through Hormuz has declined.

Impact on Global Oil Markets

The immediate consequence is a higher geopolitical risk premium on crude.

Oil prices normally respond to measurable fundamentals such as production, consumption, inventories and transportation. But when the market cannot establish how much oil is moving through Hormuz, uncertainty itself becomes part of the fundamental picture.

This can keep prices elevated even if actual physical supply losses are smaller than feared.

Brent has already moved above $100 a barrel, while analysts and major financial institutions have raised their oil price forecasts as concerns about prolonged disruption increase.

For oil-importing countries, sustained high crude prices could translate into higher fuel and transportation costs, increased inflationary pressure and greater economic uncertainty. Airlines, manufacturers and businesses dependent on energy-intensive supply chains would also face higher operating costs.

Economic and Geopolitical Implications

The crisis demonstrates how vulnerable the global energy system remains to a single strategic chokepoint.

For the United States, maintaining freedom of navigation through Hormuz is not simply a military objective. It is also essential to preventing a regional conflict from becoming a wider global energy crisis.

For Gulf producers, the challenge is equally significant. Even countries with substantial production capacity cannot fully compensate for disrupted shipping if export routes remain vulnerable.

For major Asian importers, the risks are particularly serious because much of the energy normally passing through Hormuz is destined for Asian markets. A prolonged disruption could therefore create significant pressure on import bills, currencies and inflation across energy-dependent economies.

The crisis also highlights the limits of alternative routes. Pipelines and routes outside Hormuz can reduce some of the pressure, but they cannot immediately replace the enormous volumes that normally pass through the waterway.

What’s Next?

The key variable is whether the confrontation between Washington and Tehran moves toward negotiations or further escalation.

A diplomatic breakthrough could rapidly reduce the geopolitical risk premium by restoring confidence in shipping and improving visibility over oil flows. A further escalation, however, could produce additional attacks on tankers, restrictions around the Gulf or renewed pressure on alternative shipping routes.

The oil market will therefore be watching tanker movements as closely as military developments.

If shipping activity becomes more visible and flows recover, some of the current premium could disappear. If the information blackout continues, traders may continue pricing the possibility of a much larger supply disruption.

Analysis

The deeper significance of the Hormuz crisis is that information itself has become a strategic commodity.

Modern energy markets have traditionally depended on the ability to monitor ships, cargoes and supply chains with increasing precision. Satellite imagery, tracking systems and port data created an assumption that physical oil flows could be observed and measured with reasonable accuracy.

That assumption is now being challenged.

The result is a market where perception can influence prices almost as powerfully as physical shortages. If traders believe Hormuz is becoming less reliable, they will pay more for crude today even without definitive evidence of a catastrophic supply loss.

This gives Iran an important form of strategic leverage. The threat of disruption can generate economic consequences even when actual disruption remains limited.

At the same time, Washington faces a difficult calculation. Greater military protection may help keep shipping moving, but prolonged confrontation can also increase the geopolitical risk premium that the United States is trying to contain.

The central question, therefore, is no longer simply how much oil is passing through the Strait of Hormuz. It is how long the global market can function without knowing the answer.

If that uncertainty persists, the oil market could continue carrying a substantial security premium even if physical supplies prove higher than current estimates suggest. The longer the uncertainty lasts, the more deeply it can become embedded in prices, inflation expectations and global economic planning.

With information from Reuters.

The Eastern Economic Forum (EEF) has been described as a successful solid platform since its creation. It increasingly attracts guests from widely different countries, especially leaders of China, India, Malaysia, Mongolia, and Myanmar. The leaders of Vietnam, Kazakhstan, Laos, and Thailand have visited it in various capacities. The business segment of the forum has long gone far beyond the geographical boundaries of Eurasia. Its frequent unprecedented large number of guests includes businesspeople from South America, Africa, and the Middle East. That, however, it remains open for entrepreneurial contacts with everyone whose natural interests are primarily in the trade, economic, and social spheres. This cross-platform cooperation between the structures is developing, growing deeper and creating a new agenda. The most essential feature is that the platform is guided by the principles of equality, mutual benefit, and honest dialogue, which are entirely different from those of Western-oriented structures. 

The EEF, which opened on 1st-4th September, in Russia’s Far Eastern city of Vladivostok, has become a solid platform for open and constructive dialogue among business leaders, government officials, and members of the expert community. It has also become a unique venue for discussing the strategic development of the Russian Far East and the country as a whole, while fostering and strengthening potential partnerships with counterparts, particularly from the Asia-Pacific region, in food production, infrastructure, logistics, industry, energy, and many other sectors of the economy. While recognizing the huge untapped economic potential of the region, it is also understandable that the development of the Far East largely depends on human capital, entrepreneurial efforts, and the ability of regions to create the necessary conditions for realizing the practical expectations.

On 2nd September, as part of the business program, the “Towards a Common Future: Inclusion as a Development Resource for the Far East” discussion was held with a strong focus on how to create an equal opportunity environment, develop human capital, and engage diverse groups in economic and social life. The following day, the majority of the participants in the “Inspiring Investments: A Development Strategy for Growth and Scaling” session touched on funding mechanisms for creative projects, opportunities to enter foreign markets, and collaboration between businesses, investors, development institutions, and government agencies. The key point focused on the development of the creative economy and international cooperation with Asia-Pacific countries, industry investments, the export of intellectual property and creative products, the media’s role in the development and positioning of regions in the Far East, new content formats, and training personnel for the economy of the future.

As part of the discussions at the forum, Russia and the United States continued their business dialogue, headed by Robert Agee, president and CEO of the American Chamber of Commerce in Russia (AmCham Russia), and with the participation of US representatives. It was spearheaded by the Roscongress Foundation in Russia.  Anton Kobyakov, Adviser to the President of the Russian Federation, noted, however, that there is a strong appetite on both sides for direct professional engagement. What matters most is to sustain the momentum and possibly broaden the agenda to include bilateral entrepreneurial partnership. 

“There is the need to facilitate more networking to identify specific strategic areas for cooperation,” said Robert Agee, president and CEO of the American Chamber of Commerce in Russia, and unreservedly agreed to continue their work on developing business ties and prepare for the participation of American representatives in the Russian Federation.

With many Asian and Pacific participants, explored opportunities for developing small and medium-sized enterprises. This is becoming increasingly important amid structural changes in the economy, as businesses look for new avenues for growth. The EEF made it possible not only to exchange experience but also to find concrete solutions that will help entrepreneurs adapt to changing conditions and unlock new opportunities for growth.

Developing trade, strengthening of interstate ties, and the creation of a common space for interaction among Asia-Pacific countries have assumed a new trend with Russia. The argument was logically based on Russia’s historical experience of cooperation with East Asian countries. It was further underlined that Russia and the Asia-Pacific attract politicians and entrepreneurs from around the world. In these current geopolitical circumstances, Russia needs to seek out new opportunities for development, particularly from the Asia-Pacific region, and with reference to the emerging new multipolar world. At the heart of the forum program was the search for new sources of growth and resilience for SMEs amid structural changes in the economy, from raising productivity and adopting new technologies to managing risks and adapting business models. One section of the program focused on the role of automation and artificial intelligence, changes in business processes, employees’ readiness to work with new technologies, and ways of improving productivity. 

In addition to the above, a special session was devoted to analysis where experts outlined the key economic trends across the Asia-Pacific region. As monitored, this session was set out in the analytical review entitled “Asia Trends 2026: The AI Boom, Industrial Relocation, and Geopolitical Fragmentation,” prepared ahead of the opening of the Eastern Economic Forum on 1st September. The review clearly noted, among other things, that Asia accounts for around 60% of global GDP growth and is becoming the world’s new center of trade, industry, technology, finance, and military power. Within the region, however, economic growth is highly uneven, while technology and capital are concentrated in a small group of states, making consolidation difficult. The ASEAN countries, meanwhile, face competition from Chinese manufacturers while also coming under growing geopolitical pressure from Washington. More broadly, the Asia-Pacific region is more exposed than any other to the effects of the energy crisis and to climate risks such as a super El Niño. 

According to the International Monetary Fund, Asian GDP grew by 5% in 2025, significantly ahead of global growth of 3.5%. Within the region, however, countries face a range of specific challenges, from high labor costs and insufficient industrial capacity to balance-of-payments difficulties and currency instability. These factors are driving increasingly divergent development paths among Asian economies. The region’s advanced economies, such as Japan and South Korea, posted lower growth rates, at 1.2% and 1%, respectively, in 2025. Asia’s emerging economies grew by 5.5% overall over the same period, with performance ranging from a 2% contraction in GDP in Myanmar to an 8% surge in Vietnam. 

Countries with the strongest growth prospects are attracting investment, leaving others with fewer opportunities to draw in capital. According to the United Nations Conference on Trade and Development, developing countries in Asia attracted US$644 billion in foreign direct investment in 2025. That is around 40% of the global total and more than 70% of all investment in developing countries. Capital flows are unevenly distributed: eight of the ten largest recipients of foreign direct investment among developing countries are in Asia, and together they account for around 60% of all inflows to developing economies and more than 80% of inflows to the region. 

Capital is becoming increasingly concentrated not only in a small number of countries but also in a narrow range of sectors, particularly artificial intelligence, clean energy, semiconductors, and critical minerals. In the longer term, this could deepen inequality and worsen the position of countries without a strong presence in these fields. Asia is one of the principal beneficiaries of the global AI boom. The investment cycle associated with its development has driven up demand for semiconductors, memory, servers, network equipment, and related electronics. The region occupies a central position in the global supply chain for these products. Technology exports will remain a powerful engine of economic growth in Asia, although the benefits will be distributed unevenly depending on each country’s position in the value chain.

South-East Asia’s role as an industrial center is growing as production capacity relocates there from China, which is no longer a low-cost manufacturing base. Chinese companies have begun redirecting production to Vietnam and Indonesia in particular in order to mitigate the impact of US tariffs. At the same time, China has increased its exports of industrial components and capital goods, supplying the equipment and parts needed by manufacturing centers in other countries. Exports of intermediate goods, including memory chips, other semiconductors, and industrial components, rose by 9% in 2025. Part of this represented an indirect offset to reduced shipments to the United States, as components, particularly in electronics, were used by manufacturers in other countries to produce goods that were subsequently exported to the US. A fall of roughly US$15 billion in smartphone exports, for example, was matched by a comparable increase in shipments of components, notably to India. 

In many other cases, however, the growth in exports of components and equipment was not linked to replacing sales China had lost in the US. Instead, it supported the expansion of production in third markets, especially developing ones, reinforcing China’s role as a supplier of production inputs rather than an exporter of finished goods. The result is an integrated supply chain taking shape across the region, encompassing research and development and the manufacture of high-technology components in China, assembly and packaging in an ASEAN country such as Malaysia or Vietnam, and the subsequent shipment of products to markets within the region and beyond. 

Amid the fragmentation of the global economy and trade, the development of the Eurasian space calls for resilient regional supply chains and logistical connectivity between states. Russia’s Far Eastern Federal District can play a strategically important role here. Thanks to its location, the district can serve as a resource and logistics gateway within the transport corridors linking European Russia with Asia. For a long time, infrastructure constraints held back the expansion of ties between Russia and Asian states, but the situation has begun to change with the development of the Eastern Operating Domain, which comprises the Baikal–Amur Mainline and the Trans-Siberian Railway. 

A program to modernize the Eastern Operating Domain has been under way since 2013, aimed at eliminating bottlenecks on the railways of Siberia and the Far East. Over that period, its carrying capacity has increased by 84%, reaching 180 million tonnes in 2025. The modernization is expected to raise that figure to 210 million tonnes by the end of 2030 and 270 million tonnes by the end of 2032. The development of the rail network and port infrastructure will largely determine the prospects for Eurasia and for the Asia-Pacific region in particular, as the world’s economic, financial, and trade center shifts towards the region. 

Emerging trends are reshaping the world; South-South economic partnership is seemingly becoming both the political and economic architecture. Logically, developing collaboration with Asian partners, anchoring discussions on technological leadership, and making breakthroughs in scientific fields and adopting innovative technologies are increasingly reshaping the world. Today, the role of academic institutions is to build a solid scientific and technological foundation that addresses applied industrial challenges while enhancing business efficiency, eco-friendliness, and sustainability. It is only through this synergy between science and the real economic sectors that can bring true multifaceted sovereignty. In conclusion, Asia-Pacific and Russia have to create a new model of economic and business and trade relations in the Global South.

As monitored from official reports, Russia is creating practically a new model of development of the Far East with maximally comfortable conditions for enterprises, as well as legal innovations for the investment climate in the region. Therefore, potential Asia-Pacific investors have to work on new ideas and new strategies for developing trade, agro-processing, industry, and other economic sectors in the Far Eastern region. The Eastern Economic Forum was held from September 1 to 4 on the campus of the Far Eastern Federal University. This year’s theme: “The Far East: Development for the Benefit of People.” It was the 11th EEF and organized by the Roscongress Foundation.

China is buying ninety percent of Iran’s oil exports, settling transactions in renminbi, and hiding the rest beneath layers of shell companies. This is not defiance. It is a demonstration, conducted in plain sight, of exactly how far American economic reach actually extends.

Scott Bessent promised, when he launched Operation Economic Outcast last week, that no one would be above the reach of US sanctions. China’s foreign ministry responded by saying Beijing would do everything necessary to safeguard its own rights and interests. That exchange, watched by the rest of the world, is not really about Iran. It is about whether the threat of American secondary sanctions can force a country that has already fought several trade wars with Washington to a standstill into changing its economic behaviour. The answer, which China has been demonstrating methodically for months, is no.

How China Made Itself Immune to US Secondary Sanctions

The architecture of Chinese-Iranian trade has been specifically designed to sit outside dollar-system jurisdiction. Chinese banks and companies that buy Iranian oil settle transactions in renminbi or through barter arrangements, making them effectively immune to American extraterritorial authority. The handful of Chinese entities that still touch dollar-denominated transactions do so through shell companies that can be discarded and replaced faster than Washington can identify and sanction them. The result is the regulatory whack-a-mole problem that American Treasury officials privately acknowledge, eliminate one entity, and three more appear in its place, each more obscured than the last.

Washington could escalate by sanctioning major Chinese banks and companies that have no Iran ties at all, using them as leverage to pressure Beijing to rein in those that do. That option exists on paper. In practice, it would constitute a declaration of economic war against China’s financial system at a moment when the US economy is already strained by six months of conflict with Iran, oil prices are elevated, and midterm elections are eight weeks away. The Trump administration knows this, which is why Bessent’s ultimatum came with no major Chinese institution on the sanctions list. The threat was real. The enforcement mechanism was not.

What a US Victory in Iran Would Cost Beijing

China sources roughly forty percent of its oil imports from the Gulf, with Iran accounting for ten percent of that total. If the US wins this war convincingly, meaning Iran’s government collapses or capitulates and Washington reinstalls itself as the dominant security guarantor across the Gulf, the energy architecture that China has spent two decades building becomes dependent on American goodwill. Every barrel of Gulf oil that China buys would effectively pass through a security framework Washington controls.

The regional knock-on effects compound that problem. The Mecca pact between Saudi Arabia, Turkey and Pakistan, the SCO’s deepening trade and financial architecture, the China-brokered Saudi-Iran normalisation of 2023: all of these represent years of Chinese diplomatic investment in a Middle East that is gradually reducing its security dependence on the United States. An Iranian defeat that pushes regional states back under the American umbrella undoes that investment at a stroke. From Beijing’s perspective, the cost of buying Iranian oil at a discount and absorbing American secondary sanctions is considerably lower than the cost of losing the regional influence that Iran’s survival helps sustain.

Neither Ally Nor Bystander

The SCO summit in Bishkek last week illustrated Beijing’s position with more precision than any official statement. Xi met Putin and Modi bilaterally. Iran’s President Pezeshkian attended the summit and held consultations at foreign minister level. He was not invited to Beijing. He did not get a Xi bilateral. That calibrated distance is deliberate, and it reflects a Chinese calculation that is more sophisticated than either alliance or abandonment.

Beijing does not want Iran to lose. It also does not want Iran to win so completely that Tehran’s regional hegemony destabilises the Gulf relationships China has been cultivating. The Chinese position, buying Iranian oil, refusing to arm Iran, keeping diplomatic engagement at arm’s length, is designed to keep Iran functional without making China responsible for Iranian behaviour. It is the foreign policy equivalent of keeping a fire burning without touching it.

Xi’s scheduled visit to Washington later this month, coming directly after the Bishkek summit, reinforces this reading. Beijing is simultaneously demonstrating to Iran that it has economic backing and demonstrating to Washington that it has strategic restraint. Both demonstrations serve Chinese interests. Neither requires China to choose a side.

Five Things Worth Watching

• Whether Xi’s Washington visit produces any concrete understanding on Iran-related secondary sanctions. If the two sides agree on a framework that gives China cover to quietly reduce Iranian oil purchases over time, the sanctions architecture gains traction it currently lacks. If the summit produces only standard language about constructive competition, Operation Economic Outcast’s China problem remains unresolved.
• The SCO Development Bank’s progress toward implementation. If the bank moves from agreement to operational institution in the coming months, it creates dollar-independent financing infrastructure that makes secondary sanctions significantly less effective not just for China-Iran trade but for the broader Eurasian trade network the SCO is building.
• Whether any Chinese entity on the August sanctions list is large enough that its designation produces real disruption rather than being absorbed and routed around. The signal from August’s first wave was that Washington sanctioned deliberately small targets. The size and visibility of the next wave’s targets will tell you how seriously Washington is willing to press China.
• India’s position on renminbi settlement for its own Iranian oil purchases. If Delhi follows Beijing’s approach and expands non-dollar settlement for energy trade, the secondary sanctions architecture faces a second major exemption that Washington is even less able to address given how carefully it has been courting India.
• Iran’s currency trajectory. The rial has hit record lows despite Chinese oil purchases continuing. If the currency continues to deteriorate even with Chinese demand stable, it suggests Operation Economic Outcast is landing on Iran’s non-oil economy in ways that the Chinese lifeline cannot fully offset which changes the pressure calculus regardless of whether Beijing complies.

The Bottom Line

Washington designed Operation Economic Outcast to isolate Iran. What it has demonstrated is the outer boundary of American economic jurisdiction in a world where China has spent a decade building the infrastructure to sit outside it. Renminbi settlement, dark fleet shipping, teapot refineries, shell company networks, these are not improvised workarounds. They are a parallel financial architecture, constructed precisely for this contingency, and it works well enough to keep Iranian oil flowing at volumes Washington cannot stop.

The deeper problem for the Trump administration is not that China is defying its sanctions. It is that China is proving, transaction by transaction, that the sanctions cannot be enforced against a country of sufficient size and sufficient preparation. That demonstration has an audience well beyond Beijing and Tehran. Every country currently watching whether to comply with American secondary sanctions is learning the same lesson: the reach of US economic power has a ceiling, and China has found it.

The drone strike that hit a gasoline tank at the Zawiya refinery in August was more than a security incident. Zawiya is Libya’s largest operating refining facility, and the National Oil Corporation warned that continued attacks could force operations to halt. In an economy still built almost entirely around hydrocarbons, a disruption at one major facility rarely stays local. It becomes a national economic risk.

Libya’s dependence on oil has generated enormous wealth, but it has also concentrated economic risk in a relatively narrow network of fields, pipelines, export terminals, and refineries. A disruption at any one of these nodes can threaten fuel supplies, production, and the state revenue that depends on them, reaching well beyond the site itself.

None of this means Libya should move away from oil, which will remain central to the economy for years. The more useful question is whether Libya can build enough productive capacity around it that the country’s economic future isn’t defined by the vulnerability of a handful of facilities. Diversification is often discussed in the abstract. In Libya, it is starting to take a more concrete shape, particularly in cement and steel, where investment is beginning to build an economic base around production, employment, infrastructure, and domestic value rather than around extraction alone.

Why cement is more than a construction material

Cement doesn’t carry the same strategic weight as oil in most conversations about Libya’s economy, but for a country rebuilding its cities and infrastructure, it arguably should. Housing, roads, and public infrastructure all depend on a steady domestic supply of building materials, and meeting that demand locally generates a different kind of value than exporting raw resources: factories, supply chains, jobs at multiple skill levels, and more of the value construction generates staying inside the national economy.

There is also an export dimension. Libya’s location and access to regional markets give a competitive cement industry real potential beyond its own borders. Suhail Abushiha, Libya’s Minister of Economy and Trade, has said the country could eventually export as much as 25 million tonnes of cement annually, a figure that indicates how far this ambition is meant to reach, even if it remains some distance from current output.

A functioning industrial sector depends on engineers, technicians, suppliers, contractors, energy, transport, finance, logistics, and maintenance, and its output in turn supports other industries and the wider construction economy. That is the multiplier effect Libya needs, not just revenue, as oil provides, but economic activity that spreads across businesses, regions, and communities. The foundations for that are already forming.

The industrial base already in place

Libya is not starting from scratch. The Libyan Cement Company in Benghazi remains one of the country’s most established industrial producers, accounting for roughly 20 percent of national cement output and supporting more than 1,000 direct jobs. Over the years, its cement has supplied major infrastructure and reconstruction projects, and its history tracks the broader shift in Libya’s private sector. In 2023 it came under the ownership of businessman Ahmed Gadalla and has since grown to become a defining industrial player in eastern Libya.

The company’s importance extends past what it produces. A major industrial operation generates demand for engineers, contractors, transportation, logistics, maintenance, and energy services, and its output feeds directly into the construction and infrastructure projects that will shape Libya’s future. Gadalla’s industrial interests go beyond cement, in fact. His involvement in the SULB steel venture, alongside Tosyalı Holding, follows the same logic of building productive capacity in sectors that support construction and long-term development.

Alongside these established players, Libya is seeing a new wave of large-scale investment. In Nalut, ALHEDAB Cement Company is developing a major project with an estimated investment of $600 million, designed to produce up to 12,000 tonnes of cement per day, one of the largest industrial projects currently under development in the country. What distinguishes the project isn’t only its scale. Around 25 percent of its capital is expected to open to public and foreign investors, with plans for a future stock market listing, which points to a shift in how large industrial projects in Libya could be financed going forward: less reliant on the state or a narrow group of private interests, and more open to broader participation.

Other producers are expanding the sector as well. Arabian Cement Company, a domestically owned producer based in Khoms, has an annual production capacity of roughly 3.3 million tonnes, and international companies including Pakistan’s Lucky Cement and Oman’s Raysut Cement have identified opportunities in the Libyan market. What matters is less any single project than the combined effect: a growing network of producers, suppliers, contractors, logistics companies, and skilled workers starts to resemble an industrial ecosystem rather than a collection of unrelated ventures.

Diversification depends on projects reinforcing each other

Libya’s economic future won’t be transformed by one factory or one investment announcement. Diversification becomes meaningful when industries start reinforcing each other: cement supports construction, construction creates demand for steel, transport, and engineering services, and new industrial facilities need energy infrastructure, maintenance, logistics, and finance in turn. Industry’s value isn’t limited to what leaves the factory. It lives in the network of activity that builds up around it, which matters for Libya in particular, since oil has financed much of the state for decades without creating a broad productive base on its own. Cement and steel fit that gap reasonably well, given that reconstruction already creates substantial domestic demand and regional markets could add export opportunities over time.

Incentives alone won’t be enough

Projects at this scale need capital, confidence, and long-term commitment. Libya has been working to strengthen the investment environment through incentives and guarantees aimed at domestic and foreign investors. Investment promotion mechanisms backed by the Public Investment Bank are meant to build investor confidence, and the investment framework has tried to encourage the transfer of foreign expertise and technology, including requirements such as health insurance for workers.

These measures matter, but they aren’t sufficient on their own. Market opportunities, natural resources, and favorable terms can draw investors in, but long-term industrial investment depends on something more basic: confidence that regulators apply the rules consistently, and that assets, workers, and supply chains can operate somewhere secure. That is where the Zawiya attack becomes relevant again.

Security, not just incentives, will determine whether this works

The refinery attack points to a challenge that goes beyond any single facility: Libya’s economic prospects can’t be separated from its security and political environment. A country can offer investment guarantees, but uncertainty erodes their value. A manufacturer weighing a multi-million-dollar factory has to account for demand and profitability, but also electricity, logistics, regulation, security, and whether operations can run consistently for years at a time. That is why economic diversification and institutional reform need to move together. Libya needs investment, but investment needs predictability just as much: clear regulations, reliable institutions, and an environment where companies can plan past the next political or security disruption.

The Zawiya attacks make that need difficult to ignore. They show how quickly insecurity can threaten assets central to the national economy, and they strengthen the case for an economy that doesn’t depend on a narrow set of sources. Diversification can’t eliminate political or security risk, but it can reduce how much of the country’s economic life hinges on a limited number of facilities.

Where this leaves Libya

The Zawiya fire is a warning about what happens when a national economy leans too heavily on a narrow group of critical assets. Libya will remain an oil producer for the foreseeable future, and hydrocarbons will continue generating a large share of national wealth. But that doesn’t mean the country’s economic future has to be defined by oil alone.

New cement plants are under development, existing producers continue to back reconstruction and employment, capital is opening to domestic and foreign investors, and international companies are moving in alongside Libyan businesses. These are early signs of a possible shift, not evidence of one already completed. Whether Libya can turn individual investments into a coherent industrial strategy will depend on more than capital and ambition. It will depend on regulatory reform, stronger institutions, security, and sustained commitment to building productive capacity, with Libya’s oil wealth funding the broader transformation rather than substituting for it.

The Iran conflict and disruption to the Strait of Hormuz are forcing major oil importing countries to rethink how they source crude. Countries that once relied heavily on nearby Middle Eastern suppliers are increasingly turning to producers in the Americas and Africa, accepting longer voyages and higher shipping costs in exchange for greater energy security.

Japan Diversifies Its Oil Supplies

Japan is among the clearest examples of this shift. Before the conflict, more than 90% of its crude came from the Middle East, benefiting from short and relatively inexpensive shipping routes.

Since Gulf exports were disrupted, Japanese imports from the United States have surged. Between March and June, Japan imported more than 4.5 million metric tons of US crude, compared with less than 1 million tons during the same period in 2025.

The alternative comes with a cost. US crude takes roughly nine days longer to reach Japan, increasing freight expenses and requiring refiners to adjust their delivery schedules.

Asia Looks Beyond the Middle East

Japan is not alone. South Korea and India are also increasing purchases from suppliers in the Americas and Africa as Middle Eastern shipments decline.

China, the world’s largest crude importer, has relied heavily on strategic reserves to cushion the impact of the conflict. As those reserves are drawn down, Chinese buyers could return to international markets and intensify competition for crude from alternative producers.

The Americas Emerge as Major Suppliers

The disruption has created a major opportunity for oil exporters outside the Middle East.

US crude exports reached a record 61.6 million metric tons in the second quarter of 2026, up 43% from a year earlier. Brazil, Argentina and Guyana have also recorded strong export growth.

Brazilian shipments to India, for example, were three times higher in the first half of 2026 than during the same period in 2025.

Longer Routes, Higher Costs

The new trade patterns are considerably less efficient.

A tanker travelling from major Gulf terminals to India’s western coast can take only three to five days. A shipment from Brazil to the same destination can take around 25 days.

Longer journeys mean higher tanker demand, greater freight costs and more complicated logistics. Yet importers are increasingly willing to absorb those costs because dependence on a single vulnerable supply corridor carries its own risks.

Avoiding Strategic Chokepoints

The shift is also about reducing exposure to vulnerable maritime routes.

The Strait of Hormuz remains a major risk, while geopolitical tensions have reduced traffic through the Suez Canal. Drought has also constrained the Panama Canal.

As a result, importers are increasingly valuing suppliers whose shipping routes can bypass these chokepoints.

A New Global Energy Map

The emerging pattern is creating a more geographically dispersed oil market.

Middle Eastern producers will remain crucial because of their enormous reserves, low production costs and established infrastructure. But Asian buyers are unlikely to forget the disruption caused by the Hormuz crisis.

Regular purchases from new suppliers can therefore become a form of insurance, even after Gulf exports recover.

Analysis

The most important change is that energy security is beginning to outweigh pure economic efficiency.

For decades, Asian refiners benefited from buying Middle Eastern crude because geography made it cheaper and faster. The Iran conflict has exposed the vulnerability of that model. A short shipping route is of limited value if a single geopolitical crisis can disrupt it.

The result could be a lasting diversification of global oil trade. Importers are unlikely to completely abandon Middle Eastern crude, but they may maintain larger relationships with US, Latin American and African suppliers to create alternative sources of supply.

This means the cost of energy security will increasingly be reflected in the global oil market. Longer voyages, higher freight rates and more complex supply chains may become the price importers are willing to pay for resilience.

The broader shift is therefore from an oil market designed primarily around efficiency to one increasingly designed around redundancy and geopolitical risk.

With information from Reuters.

THE HOOK

Late Monday, Donald Trump signaled the ceasefire with Iran was effectively over, threatening fresh strikes and casting doubt on the reopening of the Strait of Hormuz. Brent crude jumped past $90 a barrel. By Wednesday morning, the US Dollar Index had climbed to 99.73 — its highest in nearly three weeks — and the 10-year Treasury yield touched 4.81%, just shy of a 52-week high. The reason: traders now put the odds of a September Fed rate hike near 65–70%, not a cut.

THE MECHANISM

The chain runs cleanly enough to name. Iran’s conflict with the US raises the odds of a shipping disruption through Hormuz, which carries roughly a fifth of global oil supply; oil-price risk feeds straight into headline inflation; and a Fed under Chair Kevin Warsh — already fighting credibility questions after an ambiguous hold in July — cannot afford to look soft on prices while a war pushes them up. That is why futures markets have swung from pricing no move in 2026 to pricing a hike at the September 15–16 meeting.

Higher US rates make dollar assets pay more relative to everywhere else, which is the direct channel behind both the stronger DXY and the 4.81% ten-year. The winners are near-term and narrow: holders of short-dated Treasury bills, whose yields rise with the policy rate; US money-market funds; and, oddly, the stablecoin issuers whose reserves sit almost entirely in T-bills and now earn more for holding them. The losers are broader and slower-moving: emerging markets carrying dollar-denominated debt face a double bill, since a stronger dollar raises the local-currency cost of repayment at the same moment their own borrowing costs rise in sympathy with Washington’s. Oil-importing economies — India, Turkey, Japan, the eurozone — take a second hit, paying more for crude in a currency that is simultaneously getting more expensive to buy. Gold, meanwhile, is caught between two forces: safe-haven demand from the war pulls it up, rate-hike expectations pull it down, which is why it sits near $4,304, off its recent peak but still up 21% over the year.

WHY IT MATTERS

The apparent contradiction — dollar strong this week, dollar weaker for the decade — is really two different clocks running at once. Reserve managers make multi-year diversification bets; traders react to a war in hours. The IMF’s COFER data put the dollar at 57.13% of allocated reserves in the first quarter of 2026, down from 72% in 2000, and a recent survey of reserve managers found roughly three-quarters expect that share to keep falling over the next five years. None of that is undone by one hawkish week from Kevin Warsh.

What is new is where the dollar’s reach is actually growing: not in central bank vaults but in stablecoins. The GENIUS Act framework — now the subject of a Treasury rulemaking comment period that closes in October — has pushed issuers to back their tokens almost entirely with short-dated Treasuries, and forecasts from Standard Chartered and Senator Bill Hagerty put potential T-bill demand from stablecoins as high as $2–2.3 trillion. That is dollarization happening retail-first, in emerging-market wallets and crypto exchanges, invisible to COFER. For Washington, a Fed hike timed to a war raises borrowing costs precisely when the deficit needs cheap financing, and when the countries least able to absorb dearer dollars — many of them US partners, not adversaries — get hit hardest. That is a form of collateral leverage no sanctions list ever names.

WATCH FOR

The September 15–16 FOMC meeting is the date that resolves this. A 25-basis-point hike would confirm markets are right to treat this as an inflation fight, not a growth scare, and would likely push the dollar and yields higher still. A hold — especially if Hormuz tensions ease and oil retreats from $90 — would suggest Warsh blinked, and could send gold back toward its highs faster than the dollar can catch up. Either way, watch the Fed funds futures curve shift in the two weeks before the meeting.

Russian Foreign Ministry spokesperson Maria Zakharova told a briefing held on August 20, 2026, that “a substantial package of intergovernmental documents and commercial contracts is planned to be signed during the Russia-Africa summit, scheduled for late October.” Given the “mutual interest in stepping up our trade and investment cooperation, we plan to focus the agenda of the upcoming summit meeting on economic matters,” she said.

There, the attendees can discuss in substance a wide range of matters, including boosting Russian-African ties in agriculture, healthcare, education, and scientific-technical and cultural cooperation. “We expect to sign a substantial package of interstate documents and commercial contracts during the event. Well, and we also note, of course, with satisfaction, our partners’ considerable interest in the forthcoming event. Many African capitals have already confirmed their attendance and declared their intention to send representative delegations to Moscow, including heads of state entities and businessmen, of course,” Zakharova explained.

“We have a huge potential in this sphere, which has not yet been fully realized, as everyone admits. Key priorities have also been determined: to cooperate on peaceful uses of nuclear power; to develop independent payment systems, food security, and digitalization, including the adoption of artificial intelligence,” Zakharova underlined.

It is time to face rising realities and the balance of investment power in this 21st century. Whether Russia colonized Africa or never colonized Africa, the most convincing and essential factor is Africa simply has to work with the world’s players. Africa should collaborate with potential foreign investors with adequate funds, in practical terms, ready to invest in its development as exemplified by China. And there is still a growing sense of analytical debates over Russia’s policy approach, though. Ultimately, at least three fundamental assumptions, or appropriately primary principles, can be described as follows:

*Russia’s forthcoming October 2026 The Russia-Africa summit is framed as a chance to consolidate dozens of prior agreements and shift toward concrete economic cooperation in trade, investment, nuclear energy, food security, digitalization, and independent payment systems, yet critics note that rhetoric and signed MoUs have so far produced limited tangible results on the ground.

*Despite historical Soviet-era goodwill and frequent high-level visits, Russia remains a marginal player in African infrastructure, industry, and agriculture compared with China, the EU, and the United States; many announced projects have stalled, financing instruments are weak, and younger Africans see little contemporary economic impact beyond anti-Western messaging.

*Experts and African partners urge Moscow to move beyond nostalgia for past assistance, deliver on existing pledges with real capital and project execution, leverage platforms such as the African Continental Free Trade Area (AfCFTA), and engage Africa’s large youth and middle-class markets if it wishes to convert political alignment into sustained, mutually beneficial economic partnership.

The African Continental Free Trade Area (AfCFTA) provides a unique and valuable platform for businesses to access an integrated African market of over 1.4 billion people. The growing middle class, estimated at 380 (twice the aggregate of Russia’s population), among other factors, constitutes huge market potential in Africa. The African continent, currently, has enormous potential as a huge market, which some experts often refer to as the last business market frontier. Nevertheless, Africa’s trade with the European Union stands at $400 billion, and with China, almost $300 billion. And based on military equipment and weapons and agricultural products such as ice cream, chicken meat, fertilizers, and grain exports, Russia quoted a bilateral trade figure as $27 billion in June 2026.

The world is, increasingly, becoming multipolar. Therefore, Africa’s strength has to be directed at continental development and entrepreneurship, not at building solidarity for geopolitical games. Many African countries are enacting economic reforms; demand is growing for high-quality, competitive products. Russian businesses are interested in this niche, but Russian operators are extremely slow. The ‘snail-pace approach’ reflects their inability to determine financial instruments for supporting trade with Africa and corporate investments in Africa.

There is some level of optimism for a change, though. Russia plans to hold the next Russia-Africa summit in late October 2026. And Sergey Lavrov, minister of foreign affairs of the Russian Federation, indicated in an explicit message mid-July that “in these difficult and crucial times, the strategic partnership with Africa has become a priority of Russia’s foreign policy. Russia highly appreciates the readiness of Africans to further step up economic cooperation.”

At a meeting of the ministry’s collegium, Lavrov strongly suggested the necessity of borrowing a chapter on policy approaches and methods adopted by China in Africa. In fact, Lavrov’s suggestion exposes the inability to play catch-up and, most significantly, Russia’s financial fragility. Lavrov also said, “It is in the interests of our peoples to work together to preserve and expand mutually beneficial trade and investment ties under these new conditions. It is important to facilitate the mutual access of Russian and African economic operators to each other’s markets and encourage their participation in large-scale infrastructure projects. The signed agreements and the results will be consolidated at the forthcoming Russia-Africa summit.”

During the past years, there have been several meetings of various bilateral intergovernmental commissions both in Moscow and in Africa. The first Sochi summit discussed broadly the priorities and further identified opportunities for collaboration. There were 92 agreements signed in Sochi, which totaled RUB 1.004 trillion (equivalent to $12.5 bn), and approximately 240 agreements during the African Leaders Summit held in St. Petersburg, according to official documents. It, however, requires understanding the specific tasks and emerging challenges. The current tasks should concretely focus on taking practical and collaborative actions leading to goal-driven results. Notwithstanding the lapses, Lavrov hopes “the signed agreements and the results will be consolidated at the forthcoming Russia-Africa summit.”

Accentuating the importance of multilateral cooperation between Russia and Africa, Advisor to the President of the Russian Federation Anton Kobyakov said, “The current situation in the world is such that we are witnesses to the formation of new centers of economic growth in Africa. Competition for African markets is growing, accordingly. There is no doubt that Russia’s non-commodity exporters will benefit from cooperating with Africa on manufacturing, technologies, finances, trade, and investment.”

Kobyakov pointed to modern Russia, which already has experience of successful cooperation with African countries under its belt, as ready to make an offer to the African continent that will secure a mutually beneficial partnership and the joint realization of decades of painstaking work carried out by several generations of Soviet and Russian people.

The Soviet Union was quite extensively engaged in Africa, comparatively. Historical documents show that after the Soviet collapse, there were approximately 380 mega-projects across Africa. In the early 1990s, Russia exited, closed a number of diplomatic offices, and abandoned all these, and now there are hardly any signs of Soviet-era infrastructure projects across Africa. And now post-Soviet relations are interestingly engulfed in extensive geopolitics; Russia has only engaged in trading anti-Western slogans on the continent, which also threatens the African Union’s steps to consolidate African unity. 

In addition, Russia has only been criticizing other foreign players during the past two decades without showing any of its own template model of building relationships directed at transforming Africa’s economy. Moreover, Russian officials have underestimated the fact that Russia’s overall economic engagement is largely staggering; various business agreements signed are still not fulfilled with many African countries. Its foreign policy goal is simply to sustain the passion for declarations, signing several MoUs and bilateral agreements with African countries. Grappling with reality, there are equally many investment challenges, including official bureaucracy and the governance system in Africa.

Despite this policy rhetoric and attractive summit outlines, Russia still plays very little role, particularly in Africa’s infrastructure, agriculture, and industry. Investing in agriculture to ensure food security and investing in industry to add value to raw materials in the continent. While, given its global status, it ought to be active in Africa with noticeable corporate investments, similar to policy models of Western Europe, the European Union, the United States, and China, it is all but absent, consistently engages in geopolitical symbolism and rhetoric, and plays a negligible role, according to Professor Gerrit Olivier at the Department of Political Sciences, University of Pretoria, and former South African Ambassador to the Russian Federation.

Now at the crossroads, it could be meandering and longer than expected to make the mark. If existing challenges, obstacles, and impediments are not addressed, Russia’s return journey could take another generation to reach its destination, Africa. If not at the crossroad, then possibly at the periphery of Africa. With the current rapidly changing geopolitical world, Russia has to redefine and reassess policy parameters and adopt a more strategic approach, working with absolute consistency within the principle of finding common solutions to Africa’s development expectations and consolidating its economic sovereignty.

*This is part of the forthcoming book: Putin’s African Dream: Emerging Challenges and Opportunities (Third e-handbook).

Canadian Prime Minister Mark Carney supports a new global defense bank called the Defence, Security and Resilience Bank (DSRB), which aims to help allied countries rearm. The bank is looking to raise around €100 billion ($116 billion) to provide low-cost loans to governments and defense contractors for military projects. It will also guarantee loans for smaller, riskier firms. So far, Canada, along with Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey, and Ukraine, has expressed support for the initiative.

As of August, the DSRB had secured about €5 billion in commitments but aims for €20 billion in paid-in capital and an additional €80 billion available when necessary. However, major economies like Germany and Britain have not yet committed, which raises concerns about the DSRB’s ability to achieve the triple-A credit rating necessary for the lowest funding costs. Experts suggest that the participation of larger governments is essential to impress ratings agencies. Some potential members are hesitant about whether the DSRB can offer better financing terms than national governments, given their own budget limitations and existing commitments in similar initiatives.

Canada is actively engaging other countries ahead of the charter signing planned for autumn. DSRB founder Rob Murray emphasized the need for rearmament to address increasing security threats. He noted that many European nations are raising defense spending but are not close to meeting NATO’s targets. Carney has called for cooperation among middle powers to respond to what he sees as a changing world order.

The DSRB aims to provide funding for defense investments separate from current national debts but needs further backing to be impactful. Major European countries already have access to cheap borrowing but joining the DSRB would allow their domestic contractors to benefit from its funding. Some officials have raised concerns about overlap with existing financing programs like the EU’s SAFE program and Britain’s proposed Multilateral Defence Mechanism. There are worries about the upfront capital required for DSRB membership and the selection process for projects, as larger countries might need to contribute around €1 billion.

Murray highlighted that contributions could be spread over three years, and the DSRB could provide a more stable financing avenue for defense than existing programs. He stressed that increasing defense spending could lead to technology improvements, job creation, and economic growth while enhancing deterrence.

Canada hopes that under new Prime Minister Andy Burnham, Britain might reconsider its initial rejection of the DSRB, which was based on concerns over value for money. Burnham’s defense minister has described the DSRB as an innovative mechanism. If Britain joins, it may influence Germany’s decision to participate as well. Currently, Germany has been observing discussions but has not committed.

Industry groups in Britain and Germany are urging their governments to join the DSRB, fearing exclusion from projects financed by the bank. The DSRB has received about $10 million in support from various banks to help establish itself, and its proponents claim it is on track to achieve a high credit rating. Canada is willing to move forward with the current supporters, leaving room for other countries to join later, which could help secure the desired credit rating. The support of core shareholders is crucial for the creditworthiness of multilateral institutions.

With information from Reuters

The Iran war has pushed the global energy system into a deeper crisis, with the disruption increasingly shifting from crude oil supplies to the refined fuels that power transportation, industry and economies worldwide.

While global oil markets have adapted relatively well to the loss of a significant share of Middle Eastern crude production, the refining industry has had far fewer options to compensate.

That imbalance is already visible in fuel prices.

Brent crude is around $90 a barrel, roughly 25% above its level when the conflict began on February 28 but well below its wartime peak of $118.

Refined fuel prices, however, have remained much higher. European diesel prices have risen more than 70% since the start of the war, while U.S. gasoline prices have increased around 60%.

The growing divergence suggests that the biggest energy shock may no longer be coming from crude oil itself, but from the world’s ability to turn crude into usable fuel.

Why Are Fuel Prices Rising Faster Than Oil?

The key problem is declining refinery capacity.

The International Energy Agency estimates that more than 20% of the Middle East’s 9.6 million barrels per day of refining capacity was knocked out during the conflict.

At the same time, the closure of the Strait of Hormuz has restricted fuel exports and disrupted the movement of Gulf crude.

The result has been a chain reaction.

Refineries, particularly in Asia, have had to reduce operations because of difficulties obtaining crude, while damaged Middle Eastern facilities have struggled to return to normal production.

This has created a shortage of diesel, gasoline and other refined products even as crude oil prices have retreated from their wartime highs.

How Has Russia Made the Fuel Crisis Worse?

The Middle East is not the only source of disruption.

Months of Ukrainian attacks on Russian energy infrastructure have also reduced global refining capacity.

Russian refinery throughput has fallen by nearly 30% in recent months to below 4 million barrels per day.

The decline has forced Moscow to restrict diesel exports, removing another major source of refined fuel from international markets.

The combination of Middle Eastern refinery damage and reduced Russian output has left the global market with fewer alternatives.

That is particularly important for diesel, which is essential for freight transportation, agriculture, construction and industrial activity.

Why Are Diesel Refining Margins Surging?

The shortage is reflected in refining margins.

European diesel refining margins have more than tripled since February, rising above $75 a barrel.

U.S. diesel margins have increased more than 140%, reaching a record $100 earlier this week.

These figures demonstrate how severe the shortage has become.

Refineries capable of producing diesel and other fuels are commanding exceptionally high margins because demand remains strong while available capacity is shrinking.

The problem is that simply increasing refining margins does not immediately create new refining capacity.

Building or repairing refineries can take months or years, particularly when specialised equipment is required.

Have Global Fuel Inventories Been Depleted?

Yes, and that could become one of the biggest problems in the months ahead.

Fuel stockpiles provided an important buffer when the conflict began.

That buffer is now largely gone.

According to the U.S. Energy Information Administration, global oil inventories fell at a rate of around 3.5 million barrels per day between March and July.

Stocks are expected to continue declining through the end of the year.

U.S. diesel inventories are already at their lowest seasonal level in three decades, while gasoline stocks are at their weakest seasonal level since 2012.

This leaves the market increasingly exposed to any additional disruption.

Is There a Global Fuel Production Shortfall?

The data suggests there is.

Global refinery runs during the second quarter were 5.1 million barrels per day lower than a year earlier, according to the IEA.

High fuel prices have reduced consumption, with demand for refined products falling by around 4 million barrels per day.

But that reduction has not been sufficient.

The result was still a shortfall of more than 1 million barrels per day.

The imbalance could become even worse during the third quarter.

Refinery runs are expected to remain 4.1 million barrels per day below last year’s level, while demand is projected to fall by only 2.4 million barrels per day.

In other words, fuel supply is declining faster than demand.

Would Reopening the Strait of Hormuz Solve the Crisis?

Not necessarily.

A diplomatic breakthrough between Washington and Tehran that permanently reopened the Strait of Hormuz could send crude prices sharply lower.

But cheaper crude would not automatically translate into cheaper gasoline and diesel.

The reason is that the refining infrastructure itself has been damaged.

More than 20 Gulf refineries suffered damage during the war, and many require extensive repairs.

Crucial equipment such as compressors, heat exchangers and specialised catalysts can take significant time to obtain.

Lead times for some of these components were already stretched before the conflict.

Consequently, even if crude shipments resume quickly, refinery capacity could remain constrained for much longer.

Why Is China Important to the Energy Crisis?

China’s response could have a major impact on global fuel markets.

China is the world’s second-largest refining centre and sharply reduced refinery processing rates and fuel exports during the conflict.

If Beijing keeps exports limited, the international market will lose another potential source of refined products.

Conversely, an increase in Chinese refinery utilisation and exports could provide some relief.

But China must also balance domestic fuel demand, inventory requirements and its own energy security.

That makes its decisions particularly important for Asia and the wider global market.

Could the Energy Crisis Fuel Global Inflation?

The answer could be yes.

The immediate impact of higher fuel prices is already appearing in inflation data.

U.S. consumer prices rose 3.4% year-on-year in July, with energy costs increasing 14.7% and gasoline prices rising 24.6%.

Euro zone inflation accelerated to 2.9%, driven partly by a 10% increase in energy costs.

Japan’s producer price index rose 7.2% in July.

These figures raise concerns that the energy shock could spread beyond fuel markets.

Higher transportation costs increase the cost of moving goods, while expensive diesel raises costs for agriculture, manufacturing and logistics.

If those increases persist, businesses may eventually pass them on to consumers.

Why Could the Energy Crisis Last for Years?

The central problem is that refining capacity cannot be restored as quickly as crude production.

Oil wells can continue producing once transportation routes reopen.

Refineries, however, require complex infrastructure, specialised machinery, skilled workers and maintenance.

If damaged facilities need major reconstruction, restoring capacity could take years.

At the same time, depleted fuel inventories will eventually need to be rebuilt.

That means refiners could face sustained pressure to process more crude even after the immediate crisis ends.

The result could be a prolonged period of elevated refining margins and fuel prices.

What Does This Mean for Europe and Asia?

Europe and Asia could face particularly severe pressure.

Both regions rely heavily on imported energy and have already experienced increases in refined fuel and liquefied natural gas prices.

For European economies, expensive diesel could increase transportation and industrial costs.

For Asian economies, disruptions to Gulf crude supplies and reduced Chinese fuel exports could create additional pressure.

The combination of higher fuel and LNG prices could therefore create a broader energy inflation shock rather than an isolated oil-market disruption.

Could Consumers Eventually Reduce Demand?

Demand destruction remains one of the few mechanisms capable of restoring balance.

If fuel prices remain extremely high, consumers may drive less and businesses may reduce transportation and energy consumption.

Companies may also delay investment and cut production.

That could eventually reduce demand enough to ease pressure on the refining system.

But demand destruction carries an economic cost.

A reduction in fuel consumption caused by efficiency improvements is very different from a decline caused by households and businesses being unable to afford energy.

The latter can slow economic growth while inflation remains elevated.

Analysis: Why the Refining Crisis May Matter More Than the Oil Shock

The most important lesson from the Iran war energy crisis is that the global energy system is not simply dependent on how much oil exists, but on whether the world can refine and transport that oil into usable fuel.

The crude market has shown considerable resilience.

Refined fuel markets have not.

That distinction could determine how long the current energy shock lasts.

Even if diplomacy reopens the Strait of Hormuz and crude prices fall, damaged refineries, depleted inventories and reduced Russian exports will continue to constrain fuel supplies.

This creates a particularly difficult situation for central banks.

If energy prices rise temporarily, policymakers can theoretically look through the shock. But if fuel shortages persist for months or years, higher transportation and production costs can become embedded across the economy.

That would make the assumption of a short-lived inflation shock increasingly difficult to defend.

The depletion of global inventories is perhaps the biggest warning sign.

Stockpiles normally provide a cushion against geopolitical disruptions. That cushion has now been significantly weakened.

As a result, another major refinery outage, shipping disruption or escalation in the Middle East could produce a much larger price response than it would have before the war.

The world therefore faces a dangerous mismatch: crude supplies may recover faster than the infrastructure needed to turn them into fuel.

That is why the energy crisis could outlast the war itself.

The Iran conflict may have started as a crude oil shock, but its most consequential economic legacy could be a prolonged global shortage of refined fuels, keeping inflation and energy costs elevated long after the fighting ends.

With information from Reuters.

A potentially very strong El Niño is emerging as a major risk for global agricultural markets, threatening to disrupt rainfall, raise temperatures and expose some of the world’s most important tropical crops to severe weather stress.

The U.S. Climate Prediction Center now sees a greater than 90% chance of a very strong El Niño during the northern hemisphere autumn and winter of 2026 to 2027. For commodity markets, the concern is not simply that El Niño causes drought. Its effects vary sharply by region, meaning excessive rainfall in one major producing country can occur alongside extreme dryness in another.

That makes the phenomenon particularly important for soft commodities such as cocoa, coffee and sugar, whose production is concentrated in climate sensitive tropical regions.

Why El Niño matters for commodity markets

El Niño occurs when sea surface temperatures in the eastern Pacific become unusually warm as trade winds weaken. The pattern generally lasts between nine and 12 months and can alter global temperature and rainfall patterns.

For farmers, the problem is timing. Crops can be damaged not only by drought but also by excessive rainfall, heat, fungal disease and disrupted flowering or harvesting cycles.

This year’s potential El Niño also arrives at an unusually difficult moment for agricultural producers. Farmers are already dealing with higher fertiliser and diesel costs linked to the U.S. Israeli war on Iran. Another major weather shock could therefore amplify existing production pressures.

Historically, strong El Niño episodes have been associated with substantial increases in soft commodity prices. But the effects differ considerably between crops.

Cocoa faces one of the clearest risks

Cocoa appears particularly vulnerable because production is heavily concentrated in a relatively small number of countries.

Ivory Coast and Ghana together account for roughly half of global cocoa production, while Ecuador is the third largest producer. All three can experience significant El Niño related weather disruptions.

Every strong El Niño over the past 55 years has reduced cocoa output, according to WisdomTree.

The previous El Niño illustrates why the relationship is more complicated than simply associating the phenomenon with drought. During the initial phase of the 2023 to 2024 event, West Africa experienced unusually heavy rainfall. Excess moisture contributed to fungal disease affecting cocoa trees.

Conditions subsequently shifted toward intense heat and unusually dry Harmattan winds. Trees weakened by disease struggled to flower, further damaging production.

That sequence demonstrates the real danger for cocoa: El Niño can produce multiple weather shocks during the same crop cycle.

The consequences can quickly reach global consumers. Cocoa prices nearly tripled in 2024 after the West African harvest failed, eventually exceeding $12,000 per metric ton.

A very strong El Niño could therefore revive fears of another supply deficit if weather conditions deteriorate across major growing regions.

Coffee faces a divided outlook

Coffee presents a more complicated picture because the world’s two major varieties are concentrated in different regions.

Robusta coffee is particularly exposed to El Niño because Vietnam and Indonesia, which together account for about half of global robusta production, typically experience higher temperatures and reduced rainfall under the weather pattern.

The timing is especially important. Dry conditions can hit these countries during crop development, with the consequences becoming visible during harvesting later in the year.

Citi analysts warned that dryness in Vietnam and Indonesia could significantly reduce robusta yields.

Arabica coffee presents a different picture.

Brazil, responsible for nearly half of global arabica production, can initially benefit from warmer conditions because they reduce the risk of damaging winter frosts.

But that advantage could prove temporary. El Niño typically brings hotter and drier conditions to Brazilian coffee growing regions later in the year, when the next crop is developing.

That creates the possibility of a delayed supply shock in 2027.

Sugar could be the exception

Sugar demonstrates why El Niño does not automatically translate into a bullish commodity market.

Brazil, the world’s largest sugar exporter, can experience heavier rainfall during the second half of the year. Excessive rain can disrupt harvesting and affect sugar quality.

India and Thailand face the opposite problem. El Niño generally reduces rainfall during the summer monsoon, creating additional pressure on production.

India is already expecting its lowest monsoon rainfall in 11 years, at around 90% of the long-term average. Hedgepoint estimates that even a moderate El Niño could reduce Indian sugar production by around 1 million metric tons.

Yet there is an important counterweight.

El Niño’s wetter conditions in Brazil could ultimately support the country’s following sugar crop. Since Brazil accounts for roughly half of global sugar exports, stronger Brazilian production could offset losses elsewhere.

That means sugar may not experience the same sustained price pressure as cocoa or robusta coffee.

The bigger problem is climate uncertainty

The most important market implication is not simply whether El Niño becomes “very strong.” It is where its effects materialise and when.

Agricultural markets operate on highly specific growing cycles. Rain arriving at the wrong stage can be just as damaging as drought. Excessive rainfall can create disease, while heat can interfere with flowering and crop development.

Climate change further complicates the picture.

The relationship between El Niño and agricultural weather is becoming harder to interpret because rising global temperatures can intensify the consequences of existing climate patterns. A weather event that might previously have produced manageable stress can now occur against a much hotter baseline.

This means commodity traders increasingly have to price not just the probability of El Niño, but the interaction between El Niño, climate change and already strained agricultural supply chains.

What could happen to prices?

The clearest risk is concentrated in cocoa and robusta coffee, where production is particularly exposed to adverse conditions in major growing countries.

Cocoa has perhaps the greatest vulnerability because West Africa dominates global supply and has already experienced serious weather related production problems. Another major disruption could quickly tighten inventories and push prices higher.

Robusta coffee faces a similar risk if drought develops across Vietnam and Indonesia.

Sugar is more balanced. Production losses in India and Thailand could be partly or potentially substantially offset by improved Brazilian conditions for the following crop.

The broader lesson is that El Niño is not a uniform commodity shock. It redistributes weather risks across producing regions, creating winners and losers within the same market.

Why consumers should care

The effects will ultimately extend beyond commodity exchanges.

Higher cocoa prices can increase chocolate production costs. Coffee shortages can raise prices for roasters and consumers, while sugar disruptions can affect everything from beverages to processed foods.

And because agricultural markets are interconnected, a weather shock in one producing region can encourage buyers to compete more aggressively for supplies elsewhere.

The potential super El Niño therefore arrives at a particularly sensitive moment for global food markets.

If forecasts prove correct, the next several months could test whether commodity markets have adequately priced the risks of increasingly volatile weather.

The real threat is not El Niño alone. It is El Niño hitting an agricultural system already under pressure from rising costs, concentrated production and a changing climate.

With information from Reuters.

As the United States-Iran conflict draws renewed global attention to energy security, a quieter transformation is underway. Driven by the combined effects of El Niño and accelerating warming, the Gulf region is heating up significantly. Rising temperatures, prolonged droughts, and intense precipitation events are intensifying water scarcity and straining critical infrastructure.

For economies built on oil and gas, this environmental pressure creates complex compound risks. Unlike agriculture-based nations that face immediate crop shocks, Gulf countries confront structural vulnerabilities. Their heavy reliance on international grain markets exposes them to global price volatility, while a high dependence on energy-intensive seawater desalination ties water security directly to power consumption. Furthermore, rapid urbanization leaves critical infrastructure like power grids, ports, and data centers vulnerable to extreme weather and global supply chain disruptions.

Not surprisingly, recent adjustments to energy and water systems are no longer treated merely as environmental policies. They represent a fundamental restructuring of national development logic. In this era of extreme climate, long-term competitiveness depends less on hydrocarbon reserves and more on the upgrade of national capability systems.

Historically, the energy systems of Gulf countries focused primarily on supporting domestic growth and resource exports. Today, that strategic role has expanded to ensure the survival of modern society. Extreme heat drives up summer cooling demand and increases electricity consumption for critical infrastructure like desalination plants, transportation, and communications. According to the International Energy Agency (IEA), cooling and seawater desalination will account for roughly 40% of new electricity demand in the Middle East and North Africa by 2035.

This shift has transformed how governments view energy security. If energy systems determine whether Gulf countries can operate stably, water resources dictate the ceiling for their development. Long reliant on seawater desalination to overcome natural constraints, these nations now face soaring operating costs driven by rising temperatures and extreme weather. Vulnerabilities vary across the region. Countries like Kuwait, Qatar, and Bahrain depend almost entirely on desalination and remain highly sensitive to energy price fluctuations. Meanwhile, Saudi Arabia and the UAE are advancing water-saving technologies, wastewater recycling, and renewable-powered desalination to build resilience.

According to the World Bank’s Water-Energy-Food Nexus framework, Gulf countries must integrate energy supply, water management, wastewater treatment, and fiscal policy. A shock to any single component can amplify risks across the entire economy. For resource-based nations, while oil dictates the scale of wealth, water security increasingly governs the quality of development and the long-term viability of modern cities.

Faced with these structural pressures, Gulf strategies are shifting from risk mitigation to the cultivation of new global advantages. With annual global climate adaptation funding gaps remaining substantial, demand is surging for resilient infrastructure, water management, flood control, and smart agriculture. Armed with fiscal strength and large-scale engineering experience, Gulf nations are positioning themselves to capture these markets. Saudi Arabia and the UAE are deploying capital through sovereign wealth funds like the Public Investment Fund (PIF) and Mubadala into green hydrogen, smart cities, and sustainable infrastructure.

At the same time, the rapid expansion of artificial intelligence is creating new strategic demands. Global data center electricity consumption is projected to rise sharply by 2030, driven heavily by AI applications. For the Gulf, building large-scale computing centers in high-temperature environments demands robust power supplies and advanced cooling capacities. Sovereign wealth funds are increasingly utilizing their capital to back AI hubs and digital infrastructure, cementing their role in shaping future industries.

This evolution creates significant opportunities for international partnerships, particularly with China. China holds scale and industrial advantages in photovoltaics, energy storage, power grid equipment, desalination, and digital infrastructure. Meanwhile, the Gulf offers capital, markets, and robust green investment demand. As global competition extends from resource endowments to climate adaptation capabilities, Gulf nations are working to transform their resilience strategies into international competitiveness. Ultimately, the measure of a nation’s strength in the future will depend not only on the wealth beneath its soil, but on the safety, resilience, and adaptability of its development systems.

A gambling licence may appear like paperwork concerned with the gambling business and lawyers. Its impacts extend far beyond. Licensing rules affect revenue, business investment, consumer confidence, and government control over money flowing through digital platforms.

Online gambling also raises an old issue about economic policy. When regulation is too light, consumers risk more. Make the cost and complexity of playing too high, and players could move to an offshore operator that pays no local taxes and has no local regulator.

The real question is whether a country can build a system that people and businesses have a reason to use.

A Licence Sets the Ground Rules

Licensing decides who may enter a market and what they must prove before accepting customers. Regulators may review an operator’s finances, ownership, technology and responsible gambling controls.

High fees and lengthy applications often favour larger companies, while weaker checks can expose customers to greater risk. Approval is only the beginning.Better case management can help regulators monitor compliance, investigate complaints and act when rules are broken.

Clear licensing rules can also give reputable operators more confidence to invest. When expectations are consistent and decisions are made within a reasonable timeframe, businesses can plan more effectively, hire locally and build services that meet national standards.

Tax Rates Can Change Player Behaviour

Governments pay close attention to gambling tax receipts because the rate can shape the wider market. Higher taxes may increase revenue from each licensed operator, but they can also reduce competition, discourage investment and make offshore sites more attractive.

Lower rates may bring more operators into the regulated market, although they can leave less funding for oversight, public education and treatment services. Licence fees, corporate taxes, gambling duties and enforcement costs all need to be considered together.

Higher rates can also fall short of revenues when they do not provide sufficient incentive to regulate while encouraging activity in other markets.

These decisions are felt throughout the economy. A predictable tax system can help ensure local employment, contracts with local suppliers, and long-term investment; a tax surge could make operators reduce operations or exit the industry.

Enforcement Is Where Regulation Becomes Real

How a customer might feel the strength of enforcement: they will never read the licensing statute. But when there is a delay in withdrawal, an age check fails, or when there is a complaint and no response, then they will feel the strength of enforcement.

Regulators need trained staff, reliable data and clear legal powers to deal with these problems. Readers can also find casino sites regulated in your country to understand which licensing framework may apply before checking the operator against the regulator’s official register.

Oversight becomes more difficult when companies, customers and payments cross several jurisdictions. Regulators may need to trace payment flows, inspect ownership structures and work with banks or technology providers to address money-laundering risks and unlicensed activity.

“Licensed” Means Different Things Across Borders

Anyone researching legal online casinos by country soon finds that a licence issued in one place may carry little legal weight in another.

A casino can be a locally licensed casino in one country and an offshore casino in the neighbouring one. National market rules can be disjointed even in integrated economies, and operators and customers have to deal with varying rules in different jurisdictions.

Players should consult the official register of the relevant player’s regulator and read the laws of their state or province, especially if there are differences between them.

For operators, these differences can raise compliance costs and slow expansion into new markets. Each jurisdiction may require separate applications, technical checks and reporting systems, even when the underlying service remains largely the same.

Cross-Border Markets Need Cooperation

Online operators can get licensed in one country, raise funds in another, and provide customer service in several others. This makes enforcement challenging in situations where it is shared amongst authorities.

A gap can be plugged by providing information about ownership, payment activity, advertising infractions, and non-licensed operators. Explicit cooperation also helps expedite complaints and complicates a company’s ability to avoid accountability by relocating sections of its operations.

Cross-Border Markets Need Shared Oversight

An operator can be registered in one country, have technology in another country, and process payments in a third country. In situations where evidence and responsibility span borders, it can be difficult for national regulators.

Information-sharing can help authorities trace ownership, investigate suspicious payments and respond to unlicensed activity. Modern Diplomacy’s analysis of transparency in digital governance makes a wider point that applies here: disclosed information has value when regulators and consumers can understand it and act on it.

A licensing framework should therefore be judged by what happens in practice. Can customers resolve disputes? Can regulators remove unsuitable operators? Does legal activity stay inside the taxable market?

Those answers reveal far more than the licence badge displayed at the bottom of a website.

18+ Please gamble responsibly.

Shenzhen will host the Asia-Pacific Economic Cooperation Summit (APEC) in November 2026, particularly given its reputation as China’s Silicon Valley and a global hub for artificial intelligence and embodied intelligence. The city will showcase its advanced industrial ecosystem in robotics, new vehicles, and the digital economy, aiming to connect markets and economies across the Asia-Pacific region. Shenzhen’s innovation model, designed to link China with Asia and the Pacific, is a key priority for the APEC Summit, scheduled to be held in Shenzhen this year under the theme Building an Asia-Pacific Community for Shared Prosperity. This theme focuses on integrating the Chinese economy regionally and globally through advanced technology. Therefore, Shenzhen’s focus during the APEC 2026 Summit will be on innovation, the digital economy, and showcasing new productive forces. The meetings and discussions at the APEC 2026 Summit will be concentrated in Shenzhen. The conference aims to highlight the role of innovation and advanced digital technologies; promote regional cooperation in artificial intelligence, innovation, and digital technologies; and strengthen industrial networks and cross-border supply chains for APEC economies in the semiconductor and green technology sectors. This explains why Shenzhen, China, was chosen to host the upcoming APEC conference. It serves as a living example, showcasing Shenzhen as a model of sustainable smart cities that rely on AI algorithms in the transportation, healthcare, and services sectors.

Shenzhen is at the forefront of the regional and international AI landscape, acting as a new engine for industry by integrating digital innovation to expand markets and improve production in the Asia-Pacific region. In Shenzhen, any new idea can find the necessary components within 30 minutes, leading entrepreneurs to call this speed a Shenzhen Speed. Shenzhen is a unique global model for rapid innovation and integrated supply chains, enabling entrepreneurs to transform ideas into prototypes in just 30 minutes thanks to the integration of industrial components, a phenomenon known as “Shenzhen Speed.”   Shenzhen’s innovation environment is characterized by a seamless supply chain, where markets and factories provide all the necessary hardware and electronics components in one place, supporting entrepreneurship. The city offers an incubator environment for startups and innovators from around the world. Furthermore, its regional connectivity mechanism reinforces Shenzhen’s role as a major hub for trade and technology cooperation in the Asia-Pacific region.

Shenzhen, often called China’s Silicon Valley, is a leading global center for innovation, technology, and rapid industrial development. The city is spearheading the transformation into a smart city by integrating AI governance, the Internet of Things, and ultra-fast supply chains that enable the realization of technological ideas in record time. Embodied AI is a modern industrial trend in the city, alongside artificial intelligence. Shenzhen’s position is further solidified in technological innovation; Shenzhen’s rapid pace allows the city to provide the components for any new technological idea in just 30 minutes thanks to its massive supply chains. Furthermore, it serves as an incubator for major companies, housing the headquarters of China’s leading technology giants, such as Huawei, Tencent, DJI, and Wipertek. Shenzhen acts as a base for major companies, hosting thousands of large and emerging firms in artificial intelligence and robotics. The city is a natural hub for embodied intelligence, humanoid robot manufacturing, and smart factory applications powered by industrial AI models. This makes Shenzhen a true embodiment of digital urban leadership. It has been crowned a smart city thanks to its 5G infrastructure and dual digital models.

Shenzhen embodies the engine of Chinese technological excellence and its transformation from a port  From a small fishing ground to a leading global innovation hub, Shenzhen is not only driving the engines of modern technology but also, alongside its massive supply chains, is propelling industry and progress in the region through artificial intelligence and embodied intelligence. The city is renowned for its so-called Shenzhen Speed, where any new technological idea can find its components and factories in just 30 minutes. Shenzhen plays a significant role in driving innovation and connecting the Asia-Pacific. This will be reflected in the priorities of the APEC Summit in November 2026, hosted by Shenzhen, which aims to stimulate regional cooperation in artificial intelligence and innovation; address global economic challenges, slow growth, and rising trade protectionism by promoting integration and unity; and achieve sustainable development and create an environment conducive to innovation. This will be accomplished through the integration of ministerial efforts and related events to encourage innovation in the Asia-Pacific region.

The Chinese city of Shenzhen is a unique example of a rapid transformation from a small fishing village to a global hub for technology and innovation. Today, it leads advanced sectors such as artificial intelligence (AI), augmented intelligence (AI), and massive supply chains, becoming a driving force for technological excellence in China and the world. The key drivers of Shenzhen’s success lie in understanding its historical transformation from a simple fishing port to a leading global center for business, technology, and AI, as well as its ability to innovate by integrating AI algorithms across various industrial and service sectors and by developing augmented intelligence. Shenzhen is heavily investing in robotics and intelligent systems that physically interact with their environment, providing the world with the necessary supply chains to meet its technological needs. This is made possible by Shenzhen’s vast and flexible infrastructure for manufacturing and developing technological devices at breakneck speed.

  Finally, Shenzhen stands out as a pilot city in China, particularly in the areas of artificial intelligence (AI) and embodied intelligence (EQI). Shenzhen aims to become a national base for developing and implementing large-scale linguistic models (LCMs) and advanced AI and EQI products, integrating robots and intelligent systems into real-world and industrial environments, thus driving high-quality manufacturing forward. Furthermore, Shenzhen plays a key role in promoting smart governance by relying on AI-based solutions for efficient traffic management, security, and urban services.

Iran is set to join the New Development Bank (NDB), the development lender established by the BRICS group, Iranian central bank governor Abdolnaser Hemmati said on Wednesday, as Tehran seeks to deepen financial ties with emerging economies amid sweeping international sanctions.

Hemmati made the remarks ahead of a BRICS finance ministers and central bank governors meeting hosted by India, which holds the group’s rotating chairmanship this year.

Iran joined BRICS in 2024 as part of the bloc’s expansion and has since expressed interest in becoming a member and shareholder of the NDB. The bank was established in 2015 by Brazil, Russia, India, China and South Africa to finance infrastructure and sustainable development projects.

“The most important result of cooperation among BRICS member countries is the establishment of the New Development Bank, and our country will soon become a member of this bank,” Hemmati said, according to Iranian state media.

Iran Seeks Alternative Financial Channels

Membership of the NDB would give Iran another avenue for economic cooperation outside traditional Western dominated financial institutions, although the extent of any benefit would depend on the bank’s ability to operate with a heavily sanctioned Iranian economy.

Iran remains under extensive U.S. and international sanctions and has yet to reach a peace agreement to end its current conflict with the United States and Israel. These pressures have increased Tehran’s incentive to strengthen economic relationships with non-Western powers and reduce its exposure to dollar based financial systems.

The NDB has expanded beyond its original five members to include countries such as the United Arab Emirates and Egypt, increasing its role as a financial institution connecting emerging economies.

BRICS Pushes for Local Currency Trade

Hemmati also said Iran supported greater use of national currencies in trade among BRICS members.

BRICS countries have increasingly promoted mechanisms intended to reduce dependence on the U.S. dollar, including greater use of national currencies for bilateral trade and financial transactions.

Iran is also seeking bilateral and trilateral monetary cooperation with other BRICS members, Hemmati said.

A Strategic Financial Move for Tehran

Iran’s expected entry into the NDB is significant not simply as a development financing decision but as part of Tehran’s broader effort to build an alternative economic network amid Western sanctions.

For Iran, deeper integration with BRICS could provide additional channels for investment, infrastructure cooperation and financial transactions while strengthening economic ties with major emerging powers such as China, India and Russia. However, membership alone will not remove the restrictions created by U.S. sanctions or guarantee access to international capital.

The move also reflects the broader evolution of BRICS from an economic grouping into a platform through which its members can challenge aspects of the Western dominated financial order. Iran’s participation strengthens that trend, particularly as the group promotes greater use of local currencies and seeks to diversify international financial relationships.

For Tehran, therefore, joining the NDB would represent both an economic opportunity and a geopolitical signal: Iran is seeking to reduce its vulnerability to Western financial pressure by embedding itself more deeply within emerging non-Western economic institutions.

With information from Reuters.

Stronger Food System Offers Cushion Against El Niño

Near-record food inventories, advances in agricultural technology and the emergence of major exporters such as Brazil and Russia have made the global food system more resilient to this year’s potentially powerful El Niño than during previous severe episodes.

Global agricultural production has generally outpaced consumption and population growth since the 1980s, according to the UN Food and Agriculture Organization (FAO) and analysts.

Higher-yielding crop varieties, increased fertiliser use, improved irrigation and better crop protection have significantly raised production of major staples including rice, wheat, corn and soybeans.

“Even during drought conditions, better irrigation management and crop science mean we can still produce marketable yields,” said Andrew Whitelaw of Australian agricultural consultancy Episode 3.

While El Niño can still disrupt global supplies and push prices higher, improved agricultural preparedness means the consequences could be less severe than during previous major events.

El Niño Gathers Strength

The effects are already being felt across major agricultural regions.

Drier conditions linked to El Niño have disrupted planting across parts of Asia, including India, Southeast Asia and Australia. At the same time, shortages of fertiliser and diesel caused by the Iran war have created additional risks for global agricultural production.

India is experiencing a deficient monsoon season, while Australia’s major wheat-producing regions face the prospect of drier conditions. Crops in Indonesia, Thailand and other parts of Southeast Asia are also suffering from insufficient moisture.

The situation could deteriorate further as El Niño is expected to intensify during the fourth quarter and early next year.

U.S.-based meteorologist Chris Hyde said the event could become one of the strongest on record, meaning the biggest impact from drought may still be ahead.

El Niño is associated with warmer ocean surface temperatures across the eastern and central Pacific. The weather pattern typically produces drier conditions across large parts of Asia while increasing rainfall across the Americas.

Previous major El Niño events in 1997-98 and 2015-16 caused substantial damage to crop production, contributing to food shortages, inflation and weaker economic growth.

Drought pushed up sugar and palm oil prices after damaging production in countries including Brazil, India, Indonesia, Malaysia and Thailand. Tight rice supplies also prompted some Southeast Asian producers to restrict exports.

Australia suffered lower wheat production and exports, while countries in southern Africa were forced to increase corn imports.

Record Inventories Provide a Buffer

One of the biggest differences between previous El Niño events and the current environment is the level of global food reserves.

Near-record grain inventories, drought-tolerant seeds, improved weather forecasting, precision agriculture and better irrigation could help absorb some of the production losses.

India’s crop sowing has broadly recovered from an initial delay, although rainfall during August and September will remain important for crop maturity and grain formation.

India also holds a particularly important position in the global rice market. The country accounts for around 40% of global rice exports and has accumulated such large reserves that storage capacity is being stretched.

China, meanwhile, holds nearly half of global wheat stocks. As the world’s largest wheat producer and consumer, its large reserves could reduce the need for imports if drought damages production in major suppliers such as Australia.

Global palm oil inventories are also near historic highs, although Indonesia’s expanding biodiesel programme is expected to reduce stocks in coming months.

Brazil and Russia Strengthen Global Supply

The emergence of major agricultural exporters that were far less important several decades ago has also increased the resilience of global food markets.

Brazil has become the world’s largest soybean exporter, with shipments increasing more than 13-fold since the 1997-98 El Niño period.

Russia has also emerged as a major wheat supplier, with exports reaching 48 million tons last year compared with roughly 1 million tons in 1997-98.

These additional sources of supply give global markets more alternatives if weather damages production in individual countries.

Agricultural science has also improved. Drought-tolerant corn hybrids have become widely used across Africa and the Americas, while heat- and drought-resistant wheat varieties have gained ground in India and Australia.

Short-duration rice varieties are increasingly being used across South and Southeast Asia, allowing farmers to reduce exposure to increasingly unpredictable monsoon conditions.

Technology Changes the Equation

Farmers today also have access to technologies that were largely unavailable during the 1997-98 El Niño.

Satellite crop monitoring, seasonal climate forecasts, detailed soil-moisture maps and GPS-guided fertiliser application allow farmers to make more precise decisions about planting, irrigation and inputs.

AI-powered agricultural platforms are also increasingly combining weather forecasts, soil information and crop data to advise farmers on planting schedules, irrigation, fertiliser use and pest management.

The result is a food system that can identify and respond to weather risks earlier.

FAO Chief Economist Maximo Torero said governments now have significantly better information and can prepare earlier because forecasting and market transparency have improved.

Wars Could Undermine the Resilience

Despite these improvements, the global food system remains exposed to risks beyond weather.

The wars in the Middle East and Black Sea region could undermine some of the protection provided by stronger inventories and agricultural technology.

The Iran war has disrupted fuel and fertiliser supplies, while higher fertiliser costs could reduce farmers’ ability to maintain production.

Torero warned that much will depend on how conditions develop during the second half of 2026, particularly because agricultural input use has been affected by the Strait of Hormuz crisis.

Before its blockade during the Iran war, the Strait carried around one-fifth of global crude oil and liquefied natural gas supplies. Disruptions to the waterway have therefore created additional pressure on fuel and fertiliser markets.

Analysis: Is the Global Food System Ready?

The biggest takeaway is that El Niño is no longer operating against the same fragile agricultural system that existed during previous major events.

Higher productivity, larger inventories, diversified exporters and better technology provide several layers of protection. If one major producing region suffers a drought, supplies from countries such as Brazil and Russia, combined with existing reserves, can help prevent a sudden global shortage.

However, resilience does not mean immunity.

The greatest risk comes from the interaction between climate shocks and geopolitical disruptions. A powerful El Niño could reduce production at the same time that wars restrict fuel, fertiliser and transport. That combination could rapidly turn a manageable agricultural disruption into a broader food-price problem.

For now, large inventories provide an important buffer. But if the El Niño intensifies as expected while geopolitical disruptions continue to constrain agricultural inputs, the real test will be whether those reserves and technological gains are sufficient to prevent another surge in global food inflation.

With information from Reuters.