Energy price shock as US-Israel war on Iran continues

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The boss of the world's biggest oil company says the Hormuz bottleneck needs resolving,

or else he says there could be a catastrophe.

Its world business express from the BBC World Service,

Amliana Byrne.

An India cooking gas is in short supply and Volkswagen is slashing 50,000 jobs in Germany.

The world's biggest producer of crude oil, the Saudi firm Aramco, has warned of catastrophic

consequences if the straight to promote is blocked for an extended period of time.

But as war rages in the Middle East and attacks on shipping severely reduce the

transportation of oil and gas, Saudi Arabia's East West oil pipeline has emerged as a critical

piece of infrastructure in the global energy system. So what is this pipeline?

Simon Jack is the BBC's business editor.

I won't totally stabilize markets, but I think that markets have taken some comfort from what

Aramco said this morning. Just to be clear, what they said was they could start 70% of

shipments within days if the straight reopened. They also have alternatives, which is that they,

unlike others, have a pipeline which can take about 7 million barrels of oil a day from East

part of the Gulf to the West part. But there's another choke point with a pipeline going further

off into the West, which can only take 5 million. So there is still a choke point. But what they were

also saying was there would be catastrophic consequences if the straights of Hormuz were closed

for an extended period. Now they didn't specify how long that period would be, but other analysts

have said that anything two weeks and over would start to be a massive problem.

Do we know how much it's been here in terms of how much production it's had to clot back on?

There's two things. There's oil and gas. 20% of oil and gas goes through the straights of Hormuz.

And Qatar, which is the world's largest natural gas LNG producer, has already had to shut down

its biggest plant, which is why you saw such big rises in the gas price, which eclipse the

rises in the oil price. Now at the moment, the production is still going on. But the storage

levels are getting to the point where there's nowhere to put the oil that is being produced

in the Gulf because tankers, storage facilities are rapidly filling up. And once there's nowhere

else for the oil to go, then production will have to be shut down. Now there were fears that if you

saw switching off production, it can take quite a long time to switch back on again. It's not

as simple as flicking a switch. It's quite an involved process. But again, Aramker had some

consolation for markets around that today, saying that if they didn't have to shut down production

because there was nowhere for them to put the oil, then they would be able to start back up again

in a matter of days rather than months. And a lot of people were fearing it could be longer than that.

So again, I think there was some comfort for the market in that. Simon Jack there.

Now while the Saudi East-West pipeline means that ships can avoid traveling through the

Strait of Hormuz, things remain very complicated for the companies that transport so much

to the world's trade. For instance, Clarke is the chief executive of the world's second

biggest shipping company, Mersk. With the closing of the Strait of Hormuz,

was to figure out what is all the cargo in transit, what is going to happen to it, how we're going

to deal with what promises to pile up ahead of being able to come into the Gulf. Because all

the ships continue to sail and they make it to a port near the Strait of Hormuz and have to drop

the cargo somewhere so that they can move on, they can't just stay and wait. And we do about 40,000

containers in and out of the Gulf every week. So this is going to pile up very fast and there is

very limited areas where you can stage that much cargo. You have a lot of perishable goods, food

stuff that absolutely needs to move or risks getting spoiled. So you go into a lot of the contingency.

That was Vincent Clarke's CEO of Mersk. Now since the U.S.'s rail war in Iran began, we focused

a lot on the energy industry, but there are plenty of second-round inflationary effects for other

industries. In India, businesses and hoteliers say they are struggling to keep operations running

as gas supplies are disrupted. Here are some restaurants in Mumbai.

This will impact the working people, students, more than families. I think they can still manage

it home, but the hotel industry will face a huge impact because of this. We're facing a lot

of problems. There's no gas supply in the hotel, so what are we going to do? It's time to shut

the hotel. There's no gas. And Barasan at the Rajan is covering this one from Chennai.

This has caused a huge concern among various businesses in India. See, for example,

restaurants and hotels, they do multi-billion dollar business with a door delivery and franchises

all across the country. And many of them use a liquefied petroleum gas LPG as the main source to

cook food. Now, they don't have enough facility to stock them up, so they normally get it

like within two or three days. With the conflict running into the second week now, there are

disruption to the supplies. Many of them are saying that they have stocks only for a day or two,

and they have to shut down if they don't find alternatives. It is a chain effect. What happens is

if the restaurants are closed, the farmers are not able to sell their vegetables to the hotels.

And the delivery boys, the gig workers, they won't be able to deliver food. So there's a knock on

effect. And what I saw, even in the city here in Chennai, where, you know, the autorexia

three-wheelers, they are waiting outside the gas stations to fill many of them run on CNG.

So they say they wait for an hour and an hour and a half to get into the line to fill gas,

because that is the livelihood. So it's really, really hitting all areas of the economy,

but why is India so exposed when it comes to this conflict in the Gulf and gas supplies?

When the war came out, you know, all of a sudden, and nothing is passing through these

straight-off farmers, many very few ships passing through. So when you're into the second week

of the war, and there are concerns about supplies, the government has already warned that

even stockpiling will be punished. And they've also invoked emergency powers,

are asking many of the refineries to boost production to meet their shortage. India imports about

72-80 percent of its oil needs, and also India's the world's second biggest buyer of LPG,

the cooking gas, and they import about 60 to 70 percent. Many households, they use cooking

gas cylinders. You know, that will be a huge issue for the government if they run out of these

cylinders, and they're hoping that that war will end soon so that they can address this problem.

And Barsan Etherajan there. Uber has launched a new feature that lets female

drivers and passengers across the U.S. request trips with other women on the app.

It's rolling it out despite an ongoing lawsuit that argues the move discriminates against men.

Last month, the U.S. court ordered Uber to pay $8.5 million to a woman who said

she was raped by a man driving for Uber. The company says it will appeal.

Now, let's go to the latest on where the oil price is at. Fiona Sincada is senior market

analyst at StoneX. Fiona, where's it looking? So we've actually come down quite considerably.

If you remember, yesterday oil reached a almost four-year high of $120 a barrel, and today we've

got WTI down at around below $85 a barrel. So down around 30 percent from that peak, but we must

remember, we're still up over 20 percent from where we were prior to the conflict in Iran starting.

Then there was a brief rally in U.S. stocks, but where are they at now?

Yes, that's right. They're managing to hold on to some gains, and this is basically thanks to

that fall in oil price and some words from Trump, which sponsor optimism that maybe the war

may be finishing sooner rather than later. Well, listen, let's finish with a different story of

Volkswagen has said it will cost 50,000 jobs in Germany by 2030. This is really major,

and the company, it's really even happening a lot of problems for a while, hasn't it?

Yes, that's right. I mean, these are huge numbers that we're talking about here. And basically,

the announcement came as Volkswagen also posted sort of a post-tax profit, which had declined by 44 percent

in 2025. And this is basically being hit by U.S. tariffs, intense competition from China,

along with these high-restructuring costs as it shifts to EV.

Okay, Fiona Sincada, Senior Market Analyst at Stonex. Thank you so much for joining us,

and that is it from World Business Express. I'm Leana Bern, have a great day, and thanks so much for

listening.

The best B2B marketing gets wasted on the wrong people, so when you want to reach the right

professionals, use LinkedIn ads. LinkedIn has grown to a network of over one billion professionals,

including 130 million decision makers, and that's where it stands apart from other ad buys.

You can target your buyers by job title, industry, company, role,

seniority, skills, company revenue, so you can stop wasting budget on the wrong audience.

It's why LinkedIn ads generates the highest B2B return on ad spend of major ad networks.

Spend $250 on your first campaign on LinkedIn ads and get $250 credit for the next one.

Just go to LinkedIn.com slash broadcast. That's LinkedIn.com slash broadcast. Terms and conditions apply.