The US-Israeli war against Iran has cost businesses around the world huge losses of at least $25 billion, amid continued sharp rise in energy prices and disruption of global supply chains following the closure of vital trade corridors linked to the Strait of Hormuz, a financial analysis conducted by Reuters has revealed.
Based on the data, at least 279 global companies said they had resorted to harsh defensive and austerity measures, including raising product prices, cutting production rates, suspending the distribution of shareholder dividends, as well as temporarily laying off employees and imposing additional fuel fees in an attempt to reduce the repercussions of the crisis.
The impact of the closure of the Strait of Hormuz on oil prices
Iran's control of the Strait of Hormuz has caused a record jump in oil prices, with the price of a barrel exceeding the $100 mark, recording an increase of more than 50% compared to pre-war levels.
This crazy rise immediately cast a shadow over the shipping and air freight sector, doubling operational costs and causing widespread disruption to the flows of raw materials and commodities to international markets.
Aviation sector leads losses
The aviation sector topped the list of the hardest hit sectors, with losses of about $15 billion as a result of the nearly doubling of jet fuel prices.
In the automotive sector, Japan's Toyota estimated its potential losses at $4.3 billion, while U.S. consumer products firm Procter & Gamble forecast a net loss of $1 billion after taxes, amid warnings that the numbers could worsen as the war enters its third month.
A retreat similar to the 2008 crisis
Mark Pitzer, CEO of Whirlpool Home Appliances, likened the current decline in the industrial sector to what the world witnessed during the global financial crisis in 2008, stressing that the company was forced to cut its annual forecast by half and suspend dividends.
Around 40 companies in the chemical and basic materials sectors have also announced plans to raise the prices of their products, as a result of the sharp rise in the cost of petrochemicals from the Middle East. In Germany, automotive tyre and industry company Continental predicted losses of at least €100 million due to the boom in raw material prices.
Goldman Sachs analysts warned of growing pressure on European companies' profit margins in the second half of this year, as consumers' purchasing power declines and they cannot fully bear the additional costs.
In Japan, financiers cut their forecast for second-quarter profit growth to just 11.8%, well below preliminary estimates measured before the conflict erupted.
Warnings of the worst
Economists believe that the bulk of the economic damage has not yet been fully reflected in corporate balance sheets, with Rami Sarava, CEO of Cordoba Consulting, noting that the real impact of the decline in profits will become more pronounced in the upcoming quarterly reports if the lockdown continues.
Analysts warned that the prolongation of the war will generate a new wave of global inflation that weakens consumer confidence, which in turn will lead to a sharp decline in demand for vital sectors such as the automotive industry, home appliances and telecommunications, which will enter the global economy into a period of stagflation.