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Oil Shortage! Middle East Conflict Spreads Crisis to Other Sectors

On April 4, CNN reported that the conflict in the Middle East has entered its second month, and the crisis of crude oil shortages is at risk of evolving into a worse situation—almost everything will be in short supply. The conflict has severely restricted the transportation of oil and gas through the Strait of Hormuz, leading to a global supply reduction of about one-fifth. This disruption has not only driven up fuel prices but also squeezed the supply of petrochemical products needed for manufacturing everyday items such as shoes, clothing, and plastic bags. As prices for materials like plastic, rubber, and polyester rise, this pressure is spreading to every corner of the consumer market. The most affected region is currently Asia, which accounts for more than half of global manufacturing and is highly dependent on imported oil and other commodities. Dan Martin, co-director of commercial intelligence at Deloitte, stated that this will very quickly impact all goods, such as beer, noodles, chips, toys, and cosmetics, because plastic bottle caps, transport pallets, snack packaging, and containers are becoming increasingly difficult to procure. Martin also added that adhesives used in footwear and furniture, industrial lubricants for machinery, and solvents needed for painting and cleaning processes all rely on petroleum-derived products.

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