Blockade of the Strait of Hormuz – possible consequences

The 2022 energy crisis was an unprecedented shock for Europe. The sharp decline in Russian gas and oil supplies following the invasion of Ukraine, which resulted from irresponsible decisions by politicians in Brussels, led to record prices for energy sources and a rise in inflation. At its peak, gas on European exchanges cost ten times more than the average in previous years, and EU countries competed for every LNG delivery to avoid disruptions to energy supplies.

Before the outbreak of war in Ukraine in 2022, Russia supplied about 45% of all imported gas to the European Union. In the case of oil, Russia’s share was slightly lower, but still very high. In the years before the war, Russia supplied about 25 to 30% of the oil needed in the EU.

After abandoning Russian oil in 2022, Europe increased its imports of this raw material from the Middle East (Saudi Arabia, Iraq, United Arab Emirates, Kuwait). Currently, around 15 to 25% of the oil imported by Europe comes from the Gulf region. The vast majority of this oil has to be transported through Hormuz. This is a major dependency, but there are other suppliers for Europe: Norway, the US, West Africa and Brazil. Norway and the US together account for around 30% of EU oil imports, which is roughly the same amount that Russia was responsible for before 2022.

And what about gas? Following the reduction in supplies from Russia, the EU has increased its LNG imports, mainly from Qatar. However, the main supplier of LNG to Europe was the US, with a share of approximately 55%. Qatar has a significant but not dominant share (approximately 10-14%). The rest of LNG imports come from many smaller sources (e.g. Algeria, Norway or other countries). Therefore, dependence on the Middle East for oil and gas imports into the EU is currently much lower than dependence on Russia was before 2022.

Although Hormuz is mainly associated with oil and LNG, it is also an important trade route for many other types of raw materials. Plastics, ethylene, propylene and even fertilisers (urea, ammonia) travel through the strait. Therefore, disruptions in transport there can also lead to rising prices for plastics, packaging, car parts, fertilisers, etc. The UAE and Bahrain are among the major aluminium exporters (energy-intensive production based on cheap gas). In return, electronics and machinery pass through the ports of Dubai (Jebel Ali), Qatar and Saudi Arabia.

In summary, rising energy prices are inevitable and will affect both Europe and the rest of the world. However, Europe should not be as severely affected as it was in 2022, as the Old Continent’s energy independence has increased significantly. If the conflict escalates, Asian countries such as India and China will be most vulnerable to problems with energy availability.

Hormuz is also very important for countries in the Middle East because ships carrying agricultural raw materials arrive there. The Gulf states are heavily dependent on food imports because the climate (hot, dry, desert) limits local agricultural production. A protracted blockade is therefore unlikely.

Iran war

So, the United States has attacked Iran. Some held it for impossible, others are not surprised at all. To be precise, it was not merely that United States, but the United States in cahoots with Israel that carried out the assult. Talk of the impending war with Iran has been present in the media for years, so the recent events are merely a self-fulfilling prophecy.

Two most spectacular events stand out: the intentional killing of Al Khamenei, the top spiritual leader of Shiite Muslims, and the (unintentional?) destruction of a school, where approximately 150 schoolgirls were killed. These two events are potent enough to enrage Iranians, and to upset the Muslim world.

Iran is striking back. How much the retaliation is effective is hard to say since the Western media will not report such data.

Picture to yourself a similar event launched by Russia… Yes, there would be a deafening howl across the Western world, while Putin would be called another Hitler. As it is, the American president justifies the assault on Iran, saying, that the United States had to defend itself because it felt threatened by Tehran… Weird. When Russia says it feels threatened by Western military presence in Ukraine, then such a claim is dismissed as unfounded; when, however, it is the United States that claims to be threatened by Iran, a country located thousands of miles away from America, then such a claim is legitimate.

One might tend to think that even the blind can see the hypocrisy, but rest assured: there are many who do not see it. As the saying goes: no one is as blind as the one who won’t see.

Why did the United States attack Iran? The answers are many. One is that Iran posed a threat to Israel, America’s most important and influential ally. Another is that that West wants to lay hold on Iranian oil and gas reserves. Still some others hold forth that it is the almost sixty-million strong Christian-Zionist community in America that did all in its power to necessitate the war. Christian Zionists identify more with Judaism than with Christianity, and since some of their members are the influential politicians and billionaires, they have much political leverage. President Donald Trump is believed to share the religious convictions of the Christian Zionists. After all, his daughter Ivanka converted to Judaism after she had married a Jewish man.

Sure enough, it is not only money that makes politicians act. Ideologies and religions are equally potent. The medieval Crusaders were motivated by religious principles; Montezuma, the ruler of the Aztec state in Mexico, rather than resisting the Spanish incursion, gave in to them, being convinced that the Spaniards were God’s messengers. American Christian Zionists are doing the same. Their loyalties lie with the state of Israel in the first place. Split loyalties is a phenomenon testified by history many a time. Religious minorities very often did not feel the ethnic ties with their compatriots. Rather, they felt and acted in unison with other ethnicities against their own so long as the other ethnicity shared the same creed. The same was true of ideologies.

Now what was the purpose of killing Ayatollah Al Khamenei? This act can only stiffen Iran’s resistance. The murder of a spiritual – religious – leader sets the war in a different dimension. Add to this the murder of the 150 schoolgirls: Iranians of whatever ethnicity will rather rally around the government than betray it. While the school event might be understood as a miscalculation, the killing of the Ayatollah was beyond a shadow of a doubt purposeful.

Despite what the Americans and the Israelis had expected, Iran has not disintegrated nor has it collapsed. Iranian did not take to the streets, so regime change is nowhere in sight. What can be envisaged is a protracted war. Washington had not reckoned with it, or did it?

Warsh, Trump and Dollar

Trump has no luck or talent when it comes to choosing people for his government or entourage. Yes, Melanie may be an exception, but when the president nominated Jerome Powell as chairman of the Fed in 2018, he immediately came into conflict with him. Trump wants complete control over the dollar and financial policy, which is not possible under the Fed’s mandate. Powell acted independently, saw the danger of a return to inflation and did not lower interest rates, which angered Trump, as he wanted to increase the competitiveness of the US economy through a cheaper dollar.

Now Powell’s term is slowly coming to an end, and Trump was looking for a suitable successor. At first, he wanted to nominate Kevin Hasset, the head of the National Economic Council (NEC), but then he realised that he wanted to keep his key adviser close by. So, he opted for the young but experienced Warsh. Will he disappoint him?

There are two camps among central bankers and members of the FOMC: doves, who advocate easing, and hawks, who favour higher interest rates. Warsh is currently pursuing a hybrid approach that combines elements of both camps:

Easing Contrary to his former reputation as an inflation hardliner, Warsh currently advocates interest rate cuts. He argues that current monetary policy is too restrictive. His thesis: productivity gains (AI and deregulation) could enable the economy to grow faster without fuelling inflation, which would justify lower key interest rates.

Tightening He remains a hardliner when it comes to the Fed’s balance sheet. He calls for a significant reduction in the central bank’s balance sheet (active quantitative tightening – QT) and less market intervention. He believes that a smaller balance sheet reduces market distortions and creates the scope for permanently lower short-term interest rates.

Yes, AI is a key argument in his logic. According to Warsh, it is responsible for the “performance miracle” that is essentially disinflationary. If companies can use AI to produce more goods and services at lower costs, this increases supply. The effect? It is assumed that a larger number of raw materials on the market at lower manufacturing costs naturally prevents price increases (inflation), even when the economy is growing rapidly. However, in this case, growth is not the result of printing empty currency, but the result of increased productivity. Warsh compares this situation to the internet revolution of the 1990s, when inflation remained low despite an economic boom.

However, this may be a misconception, as AI consumes enormous amounts of energy, chips and resources for data centres, which could increase the prices of these specific services and raw materials in the short term. The performance effect should only occur in a few years, which could trigger inflation before AI can suppress it. Many analysts are also critical of the reduction in the central bank’s balance sheet. Let’s see if the Senate will accept Warsh’s nomination. In any case, it could cause turmoil in the markets.

Why must raw materials become more expensive?

Gold

For a gold mine to be profitable, the deposit must contain at least 2 million ounces of the precious metal, as this is the only way to ensure production for many years to come. In previous years/decades, new deposits were discovered and supply was guaranteed. However, in the last two years of the gold rush, when gold was being sought everywhere, no major deposits were discovered anywhere in the world! This is the first time in history and, of course, an argument for a further rise in price.

Petroleum

Shale oil is running out in the United States. According to the latest data from the Energy Information Administration (EIA), shale oil production will gradually decline, mainly due to the depletion of deposits. The Permian Basin, one of the largest and most important shale basins in the world, is expected to produce less and less shale oil in the coming years. The impending supply deficit and the ever-increasing demand for this raw material are prompting leading oil producers to seek alternative sources for extracting black gold, especially in offshore deposits. Perhaps this is also the reason for the possible war against Iran, in order to secure reserves there, as in Venezuela.

Metals and rare earths

When it comes to both, the West is completely dependent on China and Africa. The following graph shows how heavily the US depends on other countries when it comes to minerals:

Source: Elements

Particular attention should be paid to rare earths, a group of 17 nearly indistinguishable heavy metals with similar properties that are indispensable in a wide variety of technologies, high-performance magnets, electronics and industry as a whole, as well as natural graphite, which is found in lithium-ion batteries. When Trump imposed tariffs on China, Beijing responded with restrictions on rare earth exports, which only exacerbated the geopolitical situation surrounding these materials.

The data shows that Africa’s share of resources and production of important raw materials is as follows:

Platinum: 90% of global resources (mainly South Africa and Zimbabwe). Platinum is needed in catalytic converters and hydrogen technologies.
Cobalt: 70-75% of global production comes from the Democratic Republic of Congo. It is one of the key components of lithium-ion batteries.
Chromium: 85% of global reserves are of high quality. Required for the production of stainless steel.
Manganese: 80% of global resources (mainly South Africa). Key to the production of steel and batteries.
Tantalum: 60-70% of global resources (DRC, Rwanda). Indispensable in every smartphone and laptop (capacitors).
Gold: approx. 40% of global resources.

At the same time, Africa remains the least geologically explored continent on Earth. Canada spends more than US$2 billion annually on field exploration, while all African countries combined spend just over US$1 billion. This shows that if the African continent were not so politically unstable, many more deposits would likely be discovered there. In addition, more and more mines are being controlled by the Chinese (e.g. the cobalt mines in Congo), which poses a real threat to the West.

Russian fossil fuels are bad, but Russian athletes are good

Poland is known to be incurably anti-Russian. Some of the anti-Russian initiatives levelled at the Russian Federation have been rolled out by Warsaw; those that were proposed by other countries have been eagerly endorsed by Poland. There are Polish media outlets such as television channels that use very strong language in reference to Russia and Russians. This language includes terms like Russian bandits and similar. Not particularly diplomatic language.

And yet, there are four Russian-born representatives of Poland who competed in the winter Olympics in Milano Cortina: Vladimir Semirunniy (speed skating), Ekaterina Kurakova (figure skating), Vladimir Samoilov (figure skating), and Ioulia Chtchetinina (figure skating). Vladimir Semirunniy won the silver medal at the 10.000 metre race. At the Milano Cortina Olympics Poland gained only four medals, of which one was won by a Russian; to make things even more intriguing, the other three medals (two silver, one bronze) were won by one Polish athlete – Kacper Tomasiak (ski jumping). This can be interpreted as follows: the Russian athlete made up 50% of the Polish medal-winning team (yes, Tomasiak won one of his medals in a duo with Paweł Wąsek, but that’s a detail) and this Russian athlete gained 25% of the medals awarded to the Polish representation. How about that?

It turns out that Russian gas or oil are bad, so bad that Poland prefers to purchase these fuels from elsewhere and pay for them more, but Russian athletes are welcome because they can win medals. It has transpired that the most-anti-Russian nation did not flinch from accepting Russian sportsmen and sportswomen, and is now happy about the 25% gain in Olympic medals! Hilarious, isn’t it? The majority of Poles were and remain overjoyed (bribed by the success?), some remain hostile towards anything and everything Russian.

But the most hostile is – yes, you could have expected it, couldn’t you? – the huge Ukrainian diaspora in Poland. One activist Natalia Panchenko lambasted Vladimir Semirunniy on her Facebook account. She wrote, addressing Vladimir Semirunniy:

In 2019, you travel to occupied Crimea.

In 2023, you proudly represent criminal russia [intentionally lower-case ‘r’].

And then suddenly – snap – in 2025, you are granted Polish citizenship on the express basis, so that in 2026 you can go to the Olympics as a “Pole through and through”.

You win a medal and suddenly all anyone sees is the disc. As if your earlier decisions had magically evaporated.

Now what does Natalia Panchenko expect? What would she like Vladimir Semirunniy to do? Would she like him to genuflect to her? To the Bandera flag? Well, Semirunniy did what the anti-Russian Europeans expect all Russians to do: he renounced his motherland and decided to represent another nation thereby highlighting his disapproval of the Kremlin’s policy. For all intents and purposes, he betrayed his own nation. Belatedly? So what? Such a decision takes time. Why does that not satisfy Natalia Panchenko? He could have taken part in the Olympics under the flag featuring the emblem of Individual Neutral Athletes. If he had won gold, he wouldn’t have heard the Russian national anthem. If he had won gold for Poland, he would have heard the Polish national anthem. What does Natalia Panchenko think is worse, is more condemnable, from the point of view of the Kremlin? Is Vladimir Semirunniy’s decision to represent Poland – a nation most hostile to Russia – not an act of flagrant defiance to Moscow?

An example of gross injustice

The world is asking the question whether the United States will attack Iran. Some say it will, others say it won’t. Time will tell. Neither are we going to predict the future. Someone wise said once that although God created man in his image, he reserved exclusively for himself three things: to be able to make something out of nothing, to judge human conscience, and to know the future. Neither we nor any pundit knows the future, and all the prophets – religious or non-religious – are useless. The stuff that they impart is such that you and me can create similar prophecies because all the prophecies go something like this: somewhere, sometimes, someone will do something if something somewhere sometime performs something or fails to perform something. The only prophecy that comes true is the timetable showing the arrivals and departures of trains, buses and planes. Even if reality diverges from what the timetable says, it diverges but a little and only sometimes. In comparison to religious or non-religious (the famed Nostradamus) prophecies, timetable prophecies exhibit pinpoint accuracy and are 99% reliable.

Having said which, we are not going to predict the future, viewing such business as pointless. We are more into the whys and the wherefores of the mounting conflict between the United States and Iran. But facts first.

It is not the United States against Iran, but rather the United States and Israel on the one hand, and Iran on the other. Or, to be more precise: the conflict is between Israel and Iran, with the United States acting as a battering ram for the Jewish state.

Tel Aviv wishes to weaken Iran because Tel Aviv views Iran as its greatest enemy. Israel fears Tehran as such, but it will fear it even more if Tehran manufactures its own nuclear weapons. Though Israel is separated from Iran by Jordan or Syria and Iraq, Tel Aviv fears that Iran, once it produces its own nukes, will be capable of delivering a deadly strike by means of long-range missiles.

Now, does Iran want to strike Israel? According to Tel Aviv it does. Is that claim substantiated? Hardly.

Does Israel have nuclear weapons of its own? The whole world knows it does. If it does have nuclear weapons, then why should Iran or any other state, indeed, also have such weapons? Israel’s claim that it fears Iran, especially a nuclear-armed Iran, can be easily flipped to say that Iran fears nuclear-armed Israel. Whose fear is (more) legitimate? Tel Aviv claims it has peaceful intentions while Tehran has bellicose plans. Again, Tehran might flip the argumentation and say precisely the same about Tel Aviv. Such arguments and counterarguments just don’t make sense. It is obvious that if one country has weapons of mass destruction, the other feels threatened; and it is all too obvious that to allow one country (Israel) to have nukes while denying it another country (Iran) is simply an example of gross injustice.

The picture can be broadened. Why should France and the United Kingdom have weapons of mass destruction and not Italy or Spain? Why should Pakistan or India have such weapons, but God forbid that Indonesia or Vietnam should have them?

Iraq, Libya and Syria have been politically incapacitated by the actions of the United States and Israel. It is now Iran’s turn to be incapacitated. But why should Iranians toe the line drawn by Tel Aviv and Washington? Why should they swallow their national pride, why should they convert into Washington’s and Tel Aviv’s vassals? Sure enough, Tel Aviv would like to see Iran fragmented into a number of smaller states, but why should Tehran oblige Tel Aviv? Iran’s authorities know it all too well that once they deprive themselves of the possibility of manufacturing the weapons of mass destruction, once they cave in to American (Israeli) demands, they are going to slide into crisis and chaos and final disintegration. Once they lose the military leverage – even if potential as at present – they will be viewed as fair game.

Iranian leaders are fully aware of what happened to Russia once it had followed the West’s lead: it became weak and as such incapable of defending its most basic national interests. Both Gorbachev and Yeltsin acted in good faith towards the West, but this good faith was mercilessly exploited. Think of the economic crisis that Russia fell into and was stuck in throughout 1990s, think of the expansion of NATO that began to strangle Russia. Should Iran give in an inch, the same fate will surely haunt it as well. Already at present, Tehran has experienced US-controlled street riots and a twelve-day war that erupted on June 13, 2025, and was conducted while the US-Iranian talks were in full swing! Consider this perfidy.

Does this perfidy not remind you of the perfidy perpetrated by the Europeans who – having signed the Minsk I and Minsk II Accords between Ukraine and Russia – violated them on the following day? You will have remembered that both President Hollande and Chancellor Merkel bragged about it that they only signed those accords in order to play for time and lull the opponent. Why should Tehran believe Washington and Tel Aviv? Russia believed and lost on more than one occasion.

While Iraq, Yugoslavia, Libya and Syria were isolated at the time when they were being attacked by the West, Iran is not. It can count on the support of Russia and China. The Middle Kingdom purchases much oil from Iran (between 13% and 20% of its oil imports) and certainly does not wish to lose such a trade partner or to have this partner under US dominance.

Why should pressurizing Iran into submission be viewed as a justified action? What if the roles were inverted? What if Israel were pressurized into a similar submission? Or the United Kingdom? Or France?

I Am Twenty

In the 1960s, in the Soviet Union, director Marlen Khutziev completed a drama feature movie I Am Twenty (Original title: Zastava Ilycha). A magnificent film about Soviet society, about especially young people who lived then and there, about their dreams and reality. The cinecamera now zooms in, now zooms out, now pans, now follows the movement of protagonists. The accompanying soundtrack – including real radio news and the chiming of the Kremlin bells – complete the message that is put across by the images. There is a huge amount of good poetry while particular shots are in themselves works of chefs-d’oeuvre. The viewer can learn with amazement that the young people in Moscow wore the same clothes and the same hairdo that their Western peers did, that the young Russians in Moscow listened to the same music and danced the same dances that their Western peers did. Yes, there are shots from the First May Parade (Labour Day) and there are references – if few – to communistic ideals. These are, however, contrasted with the reality of everyday life: people in general lived their lives as best they could, so that there was barely a difference between them and their Western counterparts.

Yes, there is a palpable presence of the recent past, of the Great Patriotic War of 1941-1945. This culminates in the scene in which the young protagonist talks with his long-dead father who appears in uniform in the company of soldiers. They talk about this and that and eventually the son asks his father for advice about which way in life to follow. The father pauses, then asks his son about the son’s age. I’m twenty-one, answers the son. And I’m twenty, says the father and adds: So, I cannot give you advice. A poignant scene.

The movie was short lived and soon withdrawn from distribution. Why? Because the Soviet tsar – Nikita Khrushchev – did not like the film at all. A father can – and should – always give his child advice, said the Soviet tsar. And besides, why the film shows the Soviet youth as if it were the Western youth? Why does the film not focus on the ideals of communism? And so on. Once the first secretary of the Communist Party of the Soviet Union castigated the film director and vilified the story line, the less important officials followed suit. They savaged the movie and the director and the screenwriter. But you know what? The film was withdrawn from cinema theatres not because there was censorship or because the top party bosses did not like it! No, not by any means! The film was withdrawn because it was condemned by… the common people, by the communities, by the individuals that pass you in the street. It was these people who – full of indignation – would write petitions to the newspapers asking for placing a ban on the film. Does that remind you of something? It should.

Well, post a video on YouTube with a certain content and your video will be taken down by YouTube the way I Am Twenty was. And, of course, it is not YouTube that bans your video but the mysterious YouTube community and its mysterious values. You see, that kind of underhand censorship was not peculiar to the Soviet Union. Not at all. Once the gullible citizens of the Soviet Union believed that out there in the West there was freedom of speech. Now they know better. Content is taken down not because of censorship but –just like in the Soviet Union – it is the community, the common people who want to have limited access to information of works of art. You see, it is not the managers of the world but you and me who beg YouTube (and other platforms) to gag the mouths of selected content creators.

To make things even more hilarious, we need to know that Marlen – the first name of the director of I Am Twenty is an artificial name composed of Marx (Mar-) and Lenin (-len); he was raised by parents who were staunch believers in communism and his parents imbued him with respect for the system. The mentioned film ends with the shots presenting the changing of the guards at Lenin’s Mausoleum! Nonetheless, his work of art was viewed as inimical to the Soviet state and detrimental to the viewer.

I Am Twenty was only released in 1989. You watch the movie today and you wonder how was it possible to ban such a work of art, what possible threat did the picture pose to the mighty state, which – what an irony! – eventually disintegrated without people having watched this supposedly dangerous content!

Is it not going to be the same with the content that is banned by YouTube and other platforms? In a decade or three we will wonder why such things were banned. And – yes – in a decade or three the current system will collapse like the Soviet Union without us having seen the banned content. Because it is not the work of art or information that kills the system: the system kills itself because it is built on shaky foundations and supported by lies. Again and again the managers of the world think they can control minds and reality. How wrong they are!