52 The Business of Ontario Agriculture Better Farming | December 2023 “Black swan” events seem to be happening a lot more ever since COVID-19 hit us in early 2020. The resulting inflation (which caused central banks to raise interest rates), the derechos that hit the United States Midwest over the last three years, the U.S. cryptocurrency/Silicon Valley bank busts earlier this year, and the Russia-Ukraine war since the first quarter of last year are among other major events that come to mind. The Russia-Ukraine war has been raging on with no end in sight and it has severely impacted commodity prices, especially energy and grain commodities, causing them to gyrate substantially in both directions. On Oct. 7, Gaza’s militant group, Hamas, attacked Israel and abducted civilians. Israel retaliated, declaring war on Hamas and attacking Gaza. The initial knee-jerk market reaction was to buy the rumour and push energy prices higher. Crude oil prices climbed back higher to test $90/barrel in mid-October (the lows this year were near $65 in March/April) as the funds added a geo-political risk premium. This war has the potential to impact the energy markets, not because Israel or Palestine are big oil producers, but more due to increased fear that this war over prevailing territorial dispute could snowball and expand to include other Arab countries in the region, like Iran, and become a regional war. The conflict has led to skirmishes and attacks in other regions bordering Israel, like West Bank and the Lebanon-Syria border. The Middle East also includes the Organization of the Petroleum Exporting Countries (OPEC), and the region accounts for about 30 per cent of global crude oil production. The wider (and longer) the war becomes, the higher the chances are that it will affect crude oil production, trade, sentiment, and prices. A big concern has been that Iran could involve itself in the war. Iran is part of the OPEC but has western sanctions placed against it. If Iran is penalized further due to any possible involvement in the war, that could take out critical global WAR’S IMPACT ON OIL & FERTILIZER COST Evaluating war premiums & further complications. By Moe Agostino & Abhinesh Gopal Moe’s Market Minute Snowballing conflict in the Middle East could raise fertilizer prices. Emily Croft photo We appreciate all your comments, along with story ideas on issues you want to see us cover. Paul.Nolan@Farms.com HOW ARE WE DOING?
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