Patrick Pouyanné, CEO of Total France, has warned that the escalation of the U.S.-Israeli war on Iran for more than 180 days could lead to severe economic consequences globally. In an interview with Chinese network CGTN, Pouyanné stated that it has become a matter of time, as the continuation of the conflict for six months or more would result in "real effects on the economies of all countries."
Pouyanné pointed out that closing the Strait of Hormuz, which serves as a vital maritime corridor for transporting about 20% of the world's oil and natural gas, would disrupt the export of around 10 million barrels of oil daily from the Gulf region.
In his remarks during the China Development Forum, Pouyanné clarified that although major economies are capable of absorbing short-term crises, the situation becomes more complicated if the conflict persists for extended periods. He noted that the current situation necessitates countries to rely on their oil reserves as a means to mitigate the impacts of shocks arising from political tensions.
The security disruptions resulting from the conflict in the region have led Total to freeze operations in several offshore fields, which means a halt of approximately 15% of its total global oil and gas production. This reflects the negative impact that foreign investment and economic growth in the region can endure.
Pouyanné's statements coincide with the rising threats from the Iranian side to completely close the Strait of Hormuz, amid intense remarks from former U.S. President Donald Trump about destroying Iranian facilities if the strait, which has been effectively closed since the onset of the conflict more than three weeks ago, is not opened.
While the U.S. President gave the Tehran leaders 48 hours to open the strait, Iranian officials through the central operations room of the armed forces confirmed that any attack on their facilities would not be tolerated and that they would close the strait completely in response to such threats. The "Khatam Al-Anbiya Headquarters" stated that the Iranian army would strike their vital facilities and any other targets considered a threat.
This conflict is a repetition of previous oil crises in the region, which had dire consequences on global prices and supplies, such as the Hormuz Strait crisis in 2019 when tensions between Iran and the U.S. threatened to close this vital corridor.
These developments are of great importance to Arab economies, as many countries rely on oil exports as a primary source of revenue. Any escalation in this conflict could exacerbate the fragile economic situations in the countries of the region.
Thus, military and political moves in the region will not only reflect on the stability of global energy security but might also widen the gap between energy-producing and energy-consuming nations, necessitating effective political solutions to spare the entire region further disruptions.