Middle East Crisis Economic Impact

Lufthansa cancels 20,000 flights to save fuel

The Lufthansa Group is canceling around 20,000 short-haul flights between May and October to save jet fuel, the company wrote in a press release.

The German airline giant is canceling around 120 daily flights and eliminating unprofitable routes from Frankfurt and Munich during the summer period until mid-October. This corresponds to around 1 percent of the group's summer capacity, with most flights operated by regional operator Cityline.

The efficiency measures are to save around 40,000 tons of jet fuel, which has doubled in price since the outbreak of the Iran war, Lufthansa wrote.
 

Iran War Pushes Up Condom Prices

The Iran war is currently leading to an increase in production costs for condom manufacturer Karex. This in turn is leading to the company now raising its prices by up to 30 percent, according to Bloomberg.

The Malaysian company has brands such as Durex, among others, and accounts for a fifth of global production. Karex is traded on the Kuala Lumpur Stock Exchange and is up 5 percent today.

Experts: Oil Prices Do Not Reflect Supply

Oil prices do not reflect the extent of the decline in supply since the Strait of Hormuz was closed. This is what Saad Rahim, chief economist at Trafigura Group, said during a panel discussion for the FT, which Bloomberg has seen.

“Right now there is a real gap between perception and reality,” he says, suggesting that the supply reduction could reach 1.5 billion barrels of oil if the conflict continues.

During the same panel discussion, Amrita Sen, co-founder and head of research at Energy Aspects, said that it is possible that oil shipments through the Strait of Hormuz may never reach the same levels as before the war.

She estimates that around 450 million barrels of clean products, such as gasoline, will be lost in the war.


The Iran War Sets the Stage for China’s Green Energy Dominance

In the wake of the Iran War and rising fuel prices, many of the United States’ traditional allies are looking for an escape route from fossil fuel dependence. They are then forced to face an uncomfortable truth: that path leads straight into China’s arms, writes Politico.

In the EU, the UK, South Korea and the Philippines, there is growing demand for electrification and a green transition, but domestic development of renewable energy and new nuclear power takes time. If this is to happen quickly, countries will have to turn to China, which has a majority of the green technology and critical earth metals.

This poses an uncomfortable dilemma for European governments, which do not want to trade dependence on one great power for another.

“How are we going to explain to citizens what the green transition means if our batteries are made in China?” says EU Industry Commissioner Stéphane Séjourné.