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NERMEEN SHAIKH: As the U.S.-Israeli war on Iran enters its 27th day, the U.S. is threatening to intensify its bombardment as Iran rejects a U.S. proposal to end the war. Iran has issued a number of demands, including war reparation payments and recognition of Iran’s sovereignty over the Strait of Hormuz. Since the war began, Iran has largely blocked ships from passing through the critical strait, causing a global crisis. The prices for oil, natural gas and fertilizer have soared. On Wednesday, the head of Abu Dhabi’s state oil company, Sultan Al Jaber, accused Iran of committing, quote, “economic terrorism.”
SULTAN AL JABER: Weaponizing the Strait of Hormuz is not an act of aggression against one nation. It is economic terrorism against every nation, every consumer, every family that depends on affordable energy and food. When Iran holds Hormuz hostage, every nation pays the ransom at the gas pump, at the grocery store, at the pharmacy. Every household. No country can be allowed to destabilize the global economy in this way, not now, not ever.
AMY GOODMAN: Earlier this week, President Trump floated the idea of personally taking partial control of the strait himself.
REPORTER: By whom?
PRESIDENT DONALD TRUMP: Maybe me. Maybe me.
REPORTER: You want the United States to be in control of the Strait of Hormuz?
PRESIDENT DONALD TRUMP: Me and the ayatollah, whoever the ayatollah is, whoever the next ayatollah.
AMY GOODMAN: This all comes as speculation is growing the U.S. might attempt to seize Kharg Island, a key Iranian oil export hub in the Persian Gulf. The Pentagon has deployed thousands of paratroopers from the 82nd Airborne Division to the Middle East.
We go now to London, where we’re joined by Adam Hanieh, the director of the SOAS Middle East Institute of the University of London. His most recent book is Crude Capitalism: Oil, Corporate Power, and the Making of the World Market. His new piece for The New York Review of Books is headlined “Bottling the World Economy.” And his recent op-ed for The Guardian is headlined “If oil price shocks weren’t bad enough, Trump’s war could have other unintended consequences.”
Adam Hanieh, welcome to Democracy Now! It’s great to have you with us. I want to start where we left off in that lede, this issue of the U.S. sending in thousands of paratroopers, with the speculation that the U.S. might want to take over Kharg Island. If you can explain the significance of this in the Persian Gulf? And talk about the significance of what this means in the war overall.
ADAM HANIEH: Well, absolutely, we need to situate this in the wider importance of the Strait of Hormuz, as the — as we heard just now. Kharg Island is an essential oil export terminal for Iran. About 90% of Iran’s oil exports depart from that island. So, it’s clearly an attempt by the Trump administration to take control of this critical chokehold, if you like, chokepoint within Iran’s oil exports, but also within the Strait of Hormuz more generally.
NERMEEN SHAIKH: And, Adam Hanieh, if you could — you know, your New York Review of Books article, “Bottling the World Economy,” lays out very clearly the trajectory, the economic trajectory, of the Gulf countries from 1973, the founding of OPEC and the oil crisis, to the present. I mean, you point out in the piece that it’s misleading to think of Gulf countries as only the source of oil for the world. If you could lay out that trajectory and why, as a result, the stoppage, blockage of oil from the Gulf is having such wide-ranging consequences around the world?
ADAM HANIEH: Absolutely. I think one of the problems with so much of the media coverage around the Gulf and the current war is a stereotype of these Gulf states as simply being oil spigots, as simply being sources of crude oil and gas. And what it misses, I think, this focus on oil and the price of oil and crude oil, is two major changes that have taken place in the world oil industry over the last decade or so.
The first of these is that instead of going westward, the oil exports and gas exports from the region now flow overwhelmingly eastward, in particular to China. China takes around one-quarter of the world’s oil imports, one in four. Every one in four barrels of oil go to China. So we can see this kind of eastward shift in the oil exports and gas exports of the Gulf states.
And the second thing that’s really important to understand is that alongside this eastward shift, the Gulf oil companies have really diversified down the value chain. They’re no longer simply exporters of crude oil. They are manufacturers of basic chemicals. They are manufacturers of basic fertilizers. And this is really a crucial shift in the nature of these states and their integration into the global economy.
So, if we take, for example, some basic chemicals, for example, helium, about a third of the world’s helium comes from the Gulf — now, this is not a really widely known fact — most of it actually from Qatar. And what this means is that helium is a critical gas used in wide-ranging industries, semiconductor industries, in medical equipment, those sorts of things, and shortages of this gas really kind of ricochet down through our industries and supply chains globally.
The other, I think, very important example is the question of fertilizers. About a third of the world’s fertilizer exports come from the Gulf. And this is because it’s closely connected to the production of oil and gas. Saudi Arabia, for instance, is the world’s largest exporter of urea, a basic nitrogen fertilizer. Oman ranks fourth in the world’s export of this key fertilizer. So, we’re seeing price spikes for these basic fertilizers, but we’re also seeing potential shortages of these fertilizers. And this is really absolutely essential, I think, to integrate into how we think about the economic consequences of Trump’s war against Iran.
NERMEEN SHAIKH: You also point out in the piece, and you’ve just said now, that China accounts for roughly 25% of global oil imports, most of which come from Gulf states. But unlike other Asian countries, and indeed countries in Africa, as well, China has a huge amount of petroleum reserves. So, if you, first, could talk about China as the so-called workshop of the world, how it is that it became the principal importer of crude oil? That was a position that was previously held by the U.S. and Europe. Is that correct?
ADAM HANIEH: Absolutely. If we look back to the year 2000, about 4% of the world’s oil exports went to China. China was consuming about 4% of the world’s oil trade. Today, as you said, that figure is now 25%. So, this process, the first two decades of the 2000s, as China emerged at the center of global manufacturing, industry, industrial growth, industrialization, it came with it an enormous demand for energy, both oil and gas. And that’s why China and wider East Asia, South Korea and other East Asian states, have really become the center of consumption for global energy. And that’s — and as I said, the primary source of this oil and gas is from the Middle East, principally the Gulf states, as well as Iran and Iraq. These are the major sources of Chinese energy consumption, even though China itself is actually a major oil producer, but it can’t meet its energy needs simply through domestic supplies.
Now, as you pointed out, what we’ve seen in the last few years is a very deliberate attempt by the Chinese government to build up their petroleum reserves, their strategic reserves. And I think most observers, I think, are fairly clear that this is precisely because they envisaged a scenario like the one that we’re seeing today, the strangling of these oil supplies from the Gulf region and the need to build up these stockpiles in order to be able to survive that moment. So, it’s really been very evident over the last few years. The figures are not known publicly, but all experts seem to point to the fact that China has been rapidly accumulating these reserves.
AMY GOODMAN: Professor Hanieh, I think people are hearing more about the Gulf individual nations than they’ve ever heard before outside of the Gulf, particularly in the United States. I mean, The New York Times is reporting Saudi Arabia is pushing for the U.S. to continue the war. But I want to ask you about what role the Gulf plays in the logistics of world trade, starting with the Jebel Ali Port in Dubai. You say 60% of China’s trade with Europe and Asia goes through the United Arab Emirates — extremely high percentage, and this may surprise people. And then talk about the crisis in Asia right now, with the Philippines declaring a state of emergency, and South Korea, India.
ADAM HANIEH: Hello?
AMY GOODMAN: Yes. If you could respond to all of that?
ADAM HANIEH: Absolutely, yes. So, Jebel Ali, Jebel Ali Port in Dubai, is one of the largest container ports in the world. It plays a hugely important role in global trade, not just for commodity exports and imports, but also for military logistics. Jebel Ali is actually the most frequently visited port by the U.S. Navy outside of the U.S., so it’s playing a key role in kind of the military logistics of the U.S. military presence in the Gulf and wider Middle East.
But as you pointed out, alongside these kinds of changes in the oil trade that I spoke about, the Gulf has also emerged as a key logistical hub for world trade. It’s through ports like Jebel Ali that these products that we’ve spoken about, the fertilizers, the chemicals and the oil and gas, pass as they flow eastward. And it’s through Jebel Ali and other ports in the Gulf that the trade from China and East Asia flow into Europe and Africa. So, any damage to these kinds of logistical networks, these logistical infrastructures, have, again, a huge kind of ripple effect down global supply chains. And that’s, I think, what we’re seeing potentially unfold if this war should continue over the next months.
AMY GOODMAN: And what does Saudi Arabia gain by continuing the war?
ADAM HANIEH: Well, I think it’s important for your listeners and viewers to understand that the Gulf states — in particular, Saudi Arabia — have always been integrated into the bigger American strategy within the Middle East region. It’s been a key and principal ally of the United States ever since the postwar period, the post-Second World War period. And I think what we’ve seen in the last couple of decades is a tighter integration of the United States with the Gulf, and particularly with Saudi Arabia. Trump’s first visit in both his elections, after his elections, was to the region, was to Saudi Arabia. And that, I think, speaks volumes about how Saudi Arabia is placed within the wider strategy.
And I think what we see today is the United States attempting to reassert its primacy in the Middle East through this war, through its support, of course, for Israel and the war that’s currently unfolding in Lebanon, as well, and, as part of this, bring together, knit together, its kind of principal allies, the United States’ principal allies in the region, the Gulf States and Israel. And that’s, I think, what we see, really, as a kind of backdrop, the strategic backdrop to this war.
NERMEEN SHAIKH: And, Professor Hanieh, if we could talk a little bit more about the impact of the effective closure of the Strait of Hormuz? Hundreds and hundreds of tankers are reportedly stranded on either side of the strait, in addition to, of course, the ordinary functioning of countries around the world, in particular in Asia, that have been compromised by this. There is also the question of humanitarian supplies for some of the neediest countries — Sudan, Yemen, Afghanistan. Save the Children was already reporting last week that almost half a million children are being deprived of lifesaving medical supplies because of the closure. So, if you could talk about that? And then, the second issue, even once this is resolved — I mean, depending on how it’s resolved — what happened with the Red Sea, when the Houthis were attacking the Red Sea in December 2023, shippers even today largely avoid the waterway, once home to 12% of world trade, because they are still afraid of attacks on those ships. So, do you expect a similar fate for the Strait of Hormuz?
ADAM HANIEH: Well, just to begin with your first question about the potential impacts of this on people in the Global South, I think one of the problems with so much coverage of the war is its focus on potential impacts in the United States and Europe, and really not understanding, I think, these broader supply chains that we’ve spoken about. I think a useful analogy to draw is what happened in 2007, 2008, with the global food price shock of that moment. You know, there were estimated 100 million people — by the World Bank, estimated — were driven into poverty at that moment, 2007, 2008, with the price of — with the spike in food prices. And I think what we’re seeing potentially unfold today is actually much more serious, because we’re not just talking about potential spikes in food prices because of the mechanisms we’ve discussed, but also potentially key shortages in the commodities that are necessary to produce food, like fertilizers — urea and ammonia, in particular — much of which, over a third, coming from the Gulf, as we’ve said. So, that’s one thing. It’s not just price spikes. It’s also potential shortages.
And secondly, we have to recognize that many of the countries that are going to be most potentially impacted by this are already in conditions of famine or near-famine states, like, for example, Sudan, as you mentioned, and, of course, Yemen. So, we’re overlaying a crisis on a crisis that’s already very deep. The basic point here is that we need to move away from the Gulf as simply this giant oil spigot, as I’ve said. It’s active all the way down the value chain. And we need to remember that countries like Yemen and Sudan depend upon the Gulf not simply for, you know, these basic commodities, but also as the transit point for the food that these countries receive. Again, Jebel Ali is where these countries get their food. So, it’s, I think, potentially very devastating, the kind of wider Global South impacts.
On the Red Sea, yes, it’s one of the key things we can say about the war over the last few weeks, is that there hasn’t been the entry of the Houthis into any — into the Red Sea, attacks on potential shipping routes in the Red Sea. And, of course, the question of why this is the case, whether this might be something that could come in coming days if things escalate, but certainly both of these key waterways, it really does illustrate the importance of thinking about the Middle East not simply as a place of war and conflict, but as a center of the global economy. And that, I think, is something that this war has illustrated definitively in the eyes of many.
AMY GOODMAN: Adam Hanieh, we want to thank you so much for being with us, director of the SOAS Middle East Institute at the University of London. I almost said ”SOS,” which I think a lot of people are shouting right now. SOAS Middle East Institute at the University of London. His most recent book, Crude Capitalism: Oil, Corporate Power, and the Making of the World Market. And we’ll link to your articles at democracynow.org.
Coming up, we go to an ICE whistleblower. He just testified before Congress.
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AMY GOODMAN: “Streets of Minneapolis.” That’s Bruce Springsteen performing on Democracy Now!‘s 30th anniversary event on Monday at Riverside Church. To see our interview with him after he performed, about where he’s headed, beginning on No Kings Day on Saturday, moving on next week around the country, as well as the entire event, with Patti Smith — Michael Stipe will be playing later in the broadcast — you can go to democracynow.org.
