Economic effects of the war in Iran ripple around the globe

0:00Support for this podcast and the following message come from Rivian, makers of the all-electric three-row R1S SUV and the always capable R1T pickup designed with the planet and future generations in mind. Learn more or schedule a demo drive at Rivian.com. Today on State of the World, economic effects of the war in Iran ripple across the globe.

0:30You're listening to State of the World from NPR. We bring you the day's most vital international stories, up close where they're happening. It's Friday, May 1st. I'm Christine Aerosmith. The war between Iran and the U.S., along with Israel, and the resulting near-closure of the vital Strait of Hormuz waterway have had global impacts. In the U.S., a rising gas crisis has hit consumers the hardest. But in other parts of the world, there have also been energy rationing, production strains, and electricity blackouts. On today's episode, we'll take a listen to how the world is coping with this economic shock.

1:10We'll hear from reporters in Europe, Africa, Latin America, and we'll start in Asia. I'm Deer Hadid, an international correspondent based in South Asia, a region which imports much of its energy and fertiliser from the Gulf. So this war is hitting hard, some places and people worse than others. Consider K.S. Pradeep. He repairs tuk-tuks on a street in Colombo. That's the capital of Sri Lanka, an island of 22 million. And after the war began, Sri Lanka began rationing fuel. It imports two-thirds of its supply. Prices also rose. And that pushed up the price of transport, cooking gas, medicines and food.

2:03Pradeep tells us he's working on a holiday to catch stray customers because business here has halved since the war began. He's only repairing two tuk-tuks a day and he's only taking home about$10 a day. He says drivers have to choose between fixing their vehicles or buying food.

2:29He says everything's more expensive, starting from a cup of tea. Pradeep says his own family cooks less to save cooking gas. They eat cheaper food, like watery curries. This is a coping strategy that Pradeep is deploying just weeks into this crisis, and there's likely millions like him. The World Food Organisation says even before this crisis, some 20 % of Sri Lankans were food insecure. Alongside the fuel shortages, there's fertiliser shortages, because Sri Lanka used to import most of its needs from the Gulf. Farmers here say without fertiliser, they're planting less, including less rice. It's the main source of food here.

3:10So less yields could mean higher prices. And if the war continues, those fertilizer shortages will hit more upcoming planting seasons and may well ignite a South Asian hunger crisis. I'm Iter Peralta in Mexico, and here the government has been trying to swim against the tide. They have pulled out all the stops to keep prices from going up, fuel is being subsidized, and perhaps more importantly, the government has capped the price of tortillas at$1.20 a kilo. But for Mexicans at this market, it's not enough.

3:47Francisco Javier Gutierrez Fiallo says everything feels like it's out of control. The price of chicken suddenly spikes, the price of eggs goes up.

4:01I just feel like there's more instability than before. Indeed, Mexico has struggled to control inflation. The price of tomatoes, for example, has jumped more than 100 % compared to last year. Some Chiles have jumped more than 50%. Gutierrez Villallo says everything is so expensive that he has stopped eating meat. And he just doesn't get it. I thought we were an oil-producing nation, he says. It's not supposed to affect us. The only thing that has remained stable is the tortilla. and that's because of the government cap. Juan Javier Cuevas owns a tortilla shop. He says corn keeps getting more expensive because fertilizer has become more expensive.

4:45He's almost at break even, and he doesn't know how much longer he will be able to respect Mexico's price cap. The United States is to blame, he says, for provoking a senseless war.

5:06And now those of us who have nothing to do with it are having to pay the cost. I'm Lauren Fryer in London, where airlines are hiking ticket prices and cancelling flights ahead of summer vacations. The head of the International Energy Agency, Fatih Birol, predicts... In Europe, we have maybe six weeks or so jet fuel left. Supply concerns mean oil and gas companies are raking in record profits. This week, BP said its quarterly earnings more than doubled, unseen since Russia's full-scale invasion of Ukraine, while people face shock heating and fuel costs. In Ireland, angry truckers and farmers have blocked highways and the country's sole oil refinery in protest.

5:49The government there only narrowly survived a no-confidence vote, as it scrambled to boost fuel subsidies by nearly a billion dollars. Germany is lowering fuel taxes. Britain is easing emissions standards. But across Europe, growing anger threatens to topple governments. British Prime Minister Keir Starmer is trying to lower expectations of relief anytime soon. I have to level with you about Iran. Because the truth is, the economic consequences could still be with us for some time. The president of the European Commission says this could last months or years. The International Monetary Fund says Britain will take the biggest hit of any major economy because of its exposure to natural gas prices.

6:32The country's food and drink federations says food price inflation could triple by the end of this year. Energy and transport costs affect medicines as well. Mark Samuels, CEO of Medicines UK, an industry group, spoke to the BBC. In a matter of weeks, we'll either see price rises or shortages. Amid this uncertainty, Starmer has lamented how events thousands of miles away in Iran are hitting his political fortunes. His center-left Labour Party is bracing for losses in next week's local and regional elections. Anti-establishment parties are gaining steam, especially on the far right. Lauren Fryer, NPR News, London.

7:10I'm Joe Bright in Lagos. And here on the streets of Nigeria's biggest city, the fallout from the escalating conflict in Iran is already being felt. While Nigeria is a major oil producer, the benefits are not as straightforward as they might seem. Higher crude prices should boost government revenues, but Nigeria still imports much of its refined fuel, meaning, like elsewhere, consumers here are facing rising petrol prices at the pump. Across Lagos and other major cities, communities are paying more just to get to work. And the frustration for people like businesswoman Mary Douglas is clear. It has affected me so badly that I don't even go out.

7:51Most times I don't go out with my car anymore. I was shocked the other day I was going to church. I didn't have much money on me. I had just$13 ,000. I didn't know they had increased the fuel price again. Food prices are following. Traders say the cost of moving goods has surged in just weeks. Economists say the situation exposes a long-standing vulnerability, Nigeria's reliance on imported fuel despite its oil wealth. Even with the new Dangote refinery here in Lagos, Nigeria's first and Africa's largest, which was meant to cut reliance on imports, that hasn't yet led to cheaper fuel for consumers.

8:30Transport costs are also climbing. It's something realtor Adelike Papatunde says he simply cannot understand. We have crude in Nigeria, so that should not even affect us at all. Because we have the crude and we have the refinery. So why are we now suffering for other people's problems? And the ripple effects don't stop there. A weaker Naira, rising inflation and higher import costs are tightening the squeeze on households. Essential goods, from food to medicines, are becoming less affordable. For many Nigerians, this distant conflict is now a daily economic reality. That was Jewel Bright in Nigeria.

9:09We also heard from Eder Peralta in Mexico, Lauren Frayer in the UK, and Dia Hadid in Sri Lanka.

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