Strait of Hormuz crisis poses fresh threat to global food, energy

0:28Today's markets move fast.

0:33Good morning from the Financial Times. Today is Monday, March 23rd, and this is your FT News Briefing. The Strait of Hormuz is still closed, which is raising fresh alarm over global food and energy supplies. That will be a focus for the world's energy executives gathered in Texas this week. Plus, Cuba suffers its second nationwide blackout in less than a week. So what we're seeing is Cuba, which operates as a one-party state led by the Communist Party since the 60s, this is one of the most kind of existential crises it's faced. I'm Victoria Craig and here's the news you need to start your day.

1:25We're about halfway through the through a 48-hour deadline set late Saturday by U.S. President Donald Trump for Iran to reopen the Strait of Hormuz. He's threatened to strike the nation's power plants if shipping does not resume in that time. As the clock ticks down, the United Nations World Food Program says 70 ,000 tons of food aid are stranded at sea. That's because the waterway is a crucial gateway linking major shipping lanes worldwide. And with vessels blocked, key hubs are effectively cut off. About 21 ,000 tons of wheat for southern Yemen remain stuck in Oman, while shipments to the Democratic Republic of Congo are delayed in Tanzania due to congestion.

2:05The WFP warns another 45 million people could be pushed into acute hunger if the disruption continues, raising fears of a deepening global food crisis.

2:21Iran has threatened to close the Strait of Hormuz indefinitely to all traffic and launch attacks against regional energy targets if Donald Trump follows through on his threat to strike its power plants. That will certainly be a topic of conversation for titans of the energy world who are gathering in Houston, Texas this week. They're assembling at what's been dubbed the most important energy conference in the world. Our own Jamie Smith, the FT's U.S. energy editor, will also be in Houston. But first, he joins me to talk about what we can expect from the gathering. Hi, Jamie. Hi, Victoria. So you're going to be with the biggest names in energy all week.

2:58What are you expecting to hear in Houston? So we're going to see the Adnok boss, Sultan al-Jabr. We've got the Saudi Aramco boss, Amin Nasser. And I think they really want to persuade the U.S. officials that are present at this conference to try and de-escalate this crisis, prevent more attacks on their oil and gas infrastructure. I think we'll see the US officials, Chris Wright, the US Energy Secretary, Doug Burgum, the Interior Secretary, they'll come to see our week and they'll probably be urging US producers to drill more, to boost supply in a market, which is really constrained at the minute.

3:33Their goal is to drive down oil prices and the price of petrol in the US before the midterm elections in November. And then finally, maybe the U.S. oil and LNG companies, which don't have operations in the Middle East, well, they'll be presenting themselves to customers here as the safe, reliable partners. And I'd expect a lot of Japanese and Asian buyers to flock to this conference to see what type of spare capacity is available in the United States and snap that up. It's interesting how the war has sort of reshaped some of the way that this industry works, because President Trump had this goal of U.S.

4:10energy dominance when he came back into power. But actually, the conflict you've written has given China a bit of an advantage. So it's fascinating because Trump's big thing was energy dominance. And then we've got this huge crisis in the Middle East, which to a certain extent has shown that the US can be insulated a bit from a fossil fuel crisis because it is the largest producer of oil and gas in the world. But it is still affected quite significantly by this crisis. And then on the other side, you've got China, which is still reliant on fossil fuel imports, but it has stockpiled more than a billion barrels of oil over the last 18 months.

4:51It's also suspended fuel exports, from the country to ensure it doesn't run dry. But perhaps even more importantly, China has really been pursuing this electrification agenda. And it really shows the divergence between the U.S., which has pursued this fossil fuel energy dominance agenda, whereas China has very much tried to diversify and push into electrification. And what's so interesting is that China is finding an ally in America's northern neighbor, Canada, which itself is looking to become a reliable alternative to the world for oil supplies, right? Tell me more about how that's working. So last year, exports of Canadian oil to China quadrupled because of the opening of this new pipeline in Canada.

5:37And now there's a plan to really boost the LNG industry along the west coast of Canada and to try and build some more of these pipelines. And that will be very interesting because it will make China and other Asian countries less reliant on the Middle East. And crucially for Canada, it'll make it less reliant on the United States, which is by far its biggest customer. So it suits both sides very well. Jamie, what does all this mean in terms of the energy world order? Are some of these pivots temporary changes or do you think the war has really forced kind of a permanent shuffle? I think the big issue here is the duration of the war and how it ends.

6:18You know, if this war grinds on for months, then I think it is going to do permanent damage to the Middle East's reputation as a stable supplier of fossil fuels to the world. So in that case, you really will see Asian governments in particular diversifying to other suppliers. And I think perhaps more countries will see this crisis as a sort of clarion call that they've got to embrace the cleantech revolution and diversify away from fossil fuels and accelerate the move to electrification, EVs and other types of renewable technologies. All right. Well, we'll expect more dispatches from you in Houston this week.

6:57Jamie Smith, our U.S. Energy Editor. Thanks so much for your time, Jamie. Thanks very much.

7:07China is pitching itself as a, quote, harbor of stability to global business leaders as the U.S. remains bogged down in war with Iran. Premier Li Qiang told more than 70 chief executives at a Davos-style forum in Beijing on Sunday that the country offers an unmatched supply chain and a predictable commercial environment. Li presented China as a safe and reliable alternative to those in attendance, including the CEOs of Apple, UBS, and HSBC, saying they're committed to being a quote, cornerstone of certainty in a world facing trade protectionism and upheaval of the rules-based international order.

7:46Li stopped short of naming the U.S., but analysts say the message is clear. China is focused on economic development, not conflict, and aims to remain a pillar of global trade stability.

8:03As the war in Iran continues to rage, President Trump is ratcheting up his rhetoric on Cuba. Speculation is mounting that he's trying to force the country's president to step down after he said he'd, quote, have the honor of taking the island in some form. On Sunday, Cuba's deputy foreign minister told NBC's Meet the Press that despite ongoing dialogue with America, the military is preparing for the possibility of engaging with the United States. Our military is always prepared, and in fact it is preparing these days, for the possibility of military aggression. We would be naive if looking at what's happening around the world, we would not do that.

8:41All of this comes as the country is reeling from a U.S.-imposed energy blockade that's deepening a bitter economic crisis in Cuba. The FT's Joe Daniels joins me now to dig into this story. Hi, Joe. Hello. So Cuba suffered its second nationwide power cut in less than a week on Sunday. And there had been some optimism that energy supplies were on the way. But those hopes have sort of been dashed. What's the latest on that? Yes. So there were two ships heading towards Cuba with fuel. The Hong Kong flagged Seahorse and another ship, a Russian tanker, the Anatoly Kolodkin. The seahorse, carrying an estimated 27 ,000 tons of Russian gas, was due to arrive in Cuba on Monday.

9:25But it looks like it is now switched course and is headed toward Venezuela. The other ship, which is carrying around 725 ,000 barrels of oil, that is expected to arrive on March 30th. So still a week away, it might not get there. And these are really critical supplies for Cuba, right? I mean, how dependent is the country on these foreign oil sources? Oh, Cuba is very dependent on foreign oil sources to keep the lights on, to power agriculture, its tourism industry. All of that depends on oil imports. And there is some domestic production, about 40 ,000 barrels a day, but that is well below the estimated demand, which is 100 ,000 barrels a day.

10:11It's always relied on bigger benefactors, particularly Venezuela, at heavily discounted rates, usually in exchange for doctors coming from Cuba and counterintelligence personnel, spies. But with Maduro taken prisoner by U.S. special forces on January 3rd, those oil shipments have stopped. So according to the Cuban officials, they haven't received a drop of oil in three months now. And all of this has had very real impact on the people of Cuba. What is the economic situation like right now in the country? Oh, Cuba is in dire straits. There's nationwide blackouts. Hospitals are only doing the most urgent care.

10:56There's queues that last for hours or days to fill up petrol tanks. Food can't be refrigerated. The tourism industry, which never recovered from the pandemic, and has long been a vital, vital source of foreign exchange for the Cuban government, that's completely drying up. So what we're seeing is Cuba, which operates as a one-party state, led by the Communist Party since the 60s, this is one of the most kind of existential crises it's faced. So, Joe, I mean, could all of this economic pain really pile pressure on Cuba's government to cut some kind of deal with the U.S.? It's possible. The Communist Party is in a bind.

11:39We know that they're talking to the Americans and we understand that there's talks about boosting the private sector in Cuba, opening up the economy a bit to outside investment, which is something that we've already seen the Cubans signal they will do. It becomes sort of the Trumpology of reading the signals, which can vary a lot. So, yeah, he said he could do what he wants with Cuba. We don't really know when, even if, something might happen. Something I'm sure you will be keenly focused on in the days and weeks ahead, the FT's Joe Daniels. Thanks so much for your time. Thank you. You can read more on Cuba's economy and all of the stories in today's podcast for free when you click the links in our show notes.

12:27This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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