Middle East Crisis Economic Impact

Finance Ministers Demand Tax on Oil Companies' Big Profits

Five EU finance ministers want to introduce a tax on energy companies' "excess profits", reports Reuters.

This is in response to rising fuel prices as a result of the Iran war, according to a letter to the European Commission.

The countries behind the proposal are Germany, Italy, Spain, Portugal and Austria. They write that such a measure would show that "we stand united and can act":

"It would also send a clear signal that those who profit from the consequences of the war must contribute to easing the burden on the public".

Warning: Fuel Shortage if the War Prolongs

There is a risk of a shortage of jet fuel if the Middle East war drags on. This is what Lufthansa's technology and IT manager Grazia Vittadini told the German Die Welt, according to Bloomberg.

Access is already strained at some airports in Asia, she says.

- The longer the Strait of Hormuz is blocked, the more critical the situation regarding fuel supply could become, she says.

Lufthansa, which is Europe's largest airline, last week developed contingency plans that include canceling flights if demand falls and fuel prices continue to rise. 

Expert on the new blockade threat: "Must be taken seriously"

Iran is also threatening to block the strategically important Bab el-Mandeb Strait, which leads to the Suez Canal. This could force ships to take long detours around Africa, which drives up costs and delivery times - and could ultimately hit Swedish consumers. This is what DN writes.

– For the goods that are going to or from us, this is much more serious than the Strait of Hormuz, says Johan Woxenius, who is a professor of maritime transport economics at the University of Gothenburg.

He assesses that a blockade would play less of a role for more expensive and smaller goods, but would hit larger goods harder.

Middle East expert Alexander Atarodi points out that the comments of the speaker of the Iranian parliament Mohammad Bagher Ghalibaf are so far only a hint of a threat, but which still “must be taken seriously”, writes TT. Should a blockade become a reality, it could have major consequences for world trade and drive up inflation in Sweden.

– It will affect all goods from Clas Ohlson and Jysk, and from who knows what, he says.