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NEWS IN BRIEF – MIDDLE EAST – CONFLICT

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Military And Security Developments

Apr 30 Israel-Lebanon: Ceasefire expiry is increasingly likely, driving expansion of IDF ground operations. On 29 April, local reporting indicated that Israel has requested the US to set a 2-3 week deadline for ceasefire negotiations with Lebanon; a cut-off broadly consistent with the ceasefire’s current expiration on 18 May at 0000hrs (local time). The request follows a week of gradually intensifying hostilities between Israel and Lebanese Hizballah (LH). The Lebanese government’s efforts to establish a monopoly on the use of force have been limited, as the authorities remain largely unable to compel LH to disarm. Consequently, LH retains relative operational freedom across southern Lebanon, sustaining cross-border attacks risks despite the ceasefire framework. Similarly, the Israel Defense Forces (IDF) have continued to engage in air and stand-off strikes, while ground operations have reduced. Given these escalation dynamics, we assess there is a realistic possibility of intensification of Israeli strikes in southern Lebanon in the coming days, including beyond the IDF-demarcated ‘yellow line’ zone. The ceasefire is increasingly likely to end by 1 June, in the absence of a substantive agreement. Its collapse would remove operational constraints on the IDF, enabling a likely phased expansion of its ground operations towards the Zahrani River in southern Lebanon.

KEY DEVELOPMENTS 

  • IRAN-US: The deadlock between the US and Iran will likely persist in the coming days, maintaining upwards price pressure on global markets.
  • UAE: The UAE’s exit from OPEC will likely prompt a partial increase in local oil production in the coming weeks, though a major positive impact on global oil market prices is unlikely as long as the Strait of Hormuz remains blocked.
  • CHILE: Restrictions on Chinese sulphuric acid shipments will increase operational disruption risks for Chilean copper producers, in turn exacerbating global supply chain risks.
  • CHINA: The impact of the Israel-US-Iran war is starting to have a more pronounced impact on China’s economy, despite the current ceasefire.
  • EUROPE REGION: Rising aluminium prices and supply insecurity will increase operational disruption risks across several key industries, including in the automotive (notably electric vehicles), construction, packaging, aviation and renewable energy sectors.
  • SUB-SAHARAN AFRICA REGION: The likely rise in regional diesel and fuel prices in the coming week will compound operational disruption and unrest risks

MIDDLE EAST, NORTH AFRICA AND TURKEY

  • IRAN-US: The deadlock between the US and Iran will likely persist in the coming days, maintaining upwards price pressure on global markets. On 29 April, US President Donald Trump issued further demands for Iran to agree to the US’ ceasefire proposals, amid a protracting diplomatic deadlock and the diminishing prospects for productive negotiations. The statement came shortly after the Wall Street Journal published a report indicating that Trump has directed aides to prepare for the indefinite extension of the US’ blockade of Iranian ports, which aims to maximise economic pressure on Iran. Although this blockade will almost certainly continue to increase economic pressure on Iran in the coming days and weeks, Iran is highly likely to sustain its efforts to bypass the blockade covertly via alternative trade routes, including rail and road networks (see Sibylline Middle East Crisis Update – 27 April 2026). Although these efforts are unlikely to mitigate the economic pressure on Tehran entirely, they will lessen the effectiveness of Washington DC’s moves to secure concessions, moderating the prospects for a bilateral diplomatic breakthrough in the coming days. Consequently, Iran is highly likely to maintain its de facto closure of the Strait of Hormuz in the short term. This will critically disrupt maritime supply chains and maintain upward price pressure on global energy and commodity markets.
  • UAE: The UAE’s exit from OPEC will likely prompt a partial increase in local oil production in the coming weeks, though a major positive impact on global oil market prices is unlikely as long as the Strait of Hormuz remains blocked. On 28 April, the UAE announced it would quit OPEC and OPEC+ effective from 1 May. The Emirati government stated that its decision focused on national interest and reflected its economic vision and evolving energy profile. The move is highly likely to impact OPEC’s strategy significantly over the next two years, as the UAE had held the second-highest spare production capacity in the organisation after Saudi Arabia. Free of OPEC production constraints, the UAE will now be able to target an output of up to 4.9 million barrels per day (bpd). This is likely to exert partial downward pressure on global oil prices while increasing market entry opportunities for energy investors in the country. However, we assess that any immediate production increase is unlikely to impact oil market prices materially in the coming weeks, as disruption in the Strait of Hormuz persists and the UAE’s alternative Habshan–Fujairah pipeline is already operating at near its maximum capacity of 1.5 million bpd. Beyond the energy sector, the Emirati decision will almost certainly heighten already elevated tensions and economic rivalry with Saudi Arabia, augmenting the risk of diplomatic fallout in the coming months. This competition is unlikely to remain limited to energy and will increasingly extend to the technology, finance and tourism sectors, as firms face growing pressure to make a strategic choice between anchoring their regional operations in the Saudi capital, Riyadh, or in the UAE capital, Abu Dhabi, once the current conflict subsides. Additionally, there is a realistic possibility that the UAE will exit the Gulf Cooperation Council (GCC) should tensions with Saudi Arabia persist throughout 2026. In such a scenario, the operating environment for companies active across the Gulf would be significantly reshaped, driving heightened strategic, regulatory and operational risks. Mutually exclusive localisation requirements, procurement eligibility rules and regional headquarters mandates would likely increase the financial, legal and regulatory exposure for new and existing firms with operations across the region.
  • EGYPT: The government’s easing of energy-saving measures will moderate financial risks for businesses. On 26 April, Egypt’s government lifted nationwide energy-saving measures introduced approximately one month earlier in response to rising energy prices caused by the Israel-US-Iran war. Cafes and restaurants are now permitted to operate until 0100hrs (local time), while shops and malls can remain open until 2300hrs on weekdays and 0000hrs on weekends. The extended operating hours and restored footfall will moderate financial risks, particularly in the tourism and hospitality sector. The lifting of lighting restrictions will also reduce the risk of late-night collisions, moderating safety risks for in-country personnel travelling after daylight hours. More broadly, the reversal will moderate domestic unrest risks, given that the curfew had disproportionately impacted low-income and informal economy workers in an already-strained socio-economic environment. However, a collapse of the ceasefire in the coming weeks remains a realistic possibility, which would possibly prompt renewed attacks on regional energy infrastructure and drive Egypt to reimpose rationing measures.

AMERICAS 

  • CHILE: Restrictions on Chinese sulphuric acid shipments will increase operational disruption risks for Chilean copper producers, in turn exacerbating global supply chain risks. Chinese customs data indicated that there were no exports of sulphuric acid to Chile in March for the first time since July 2023. This follows earlier reports that China was considering an export ban on sulphuric acid to prioritise domestic supply. Chile was China’s largest export market for sulphuric acid in 2025. Chile relies on sulphuric acid to produce refined copper via copper leaching. Given Chile’s status as the world’s largest copper producer, sulphuric acid shortages would increase the risk of disruption to refined copper production, particularly copper cathodes. The state-owned mining firm Codelco reported that it retains enough acid to last the rest of 2026; however, Codelco is only responsible for approximately 30% of Chile’s copper mining output. Although shortages are unlikely in the coming weeks, decreases in Chile’s refined copper output will increase supply chain disruption risks for the electric vehicle (EV), renewable energy and industrial manufacturing industries, particularly those in China and the US.
  • US: Fluoride shortages driven by the conflict will increase public health risks in the short term. Reports indicate that fluoride shortages have prompted some local governments to reduce their use of the agent in water supplies. At least two major water supply systems in Maryland, which serve Baltimore (Maryland) and suburban areas around the capital Washington DC, have reduced fluoride concentrations in their supplies. Elsewhere, the borough of Lititz (Pennsylvania) has halted fluoridation for several weeks due to shortages. Fluoride is widely used to improve dental health; therefore, any sustained shortages or reduced fluoridation will increase public health risks in affected areas.

ASIA-PACIFIC

  • CHINA: The impact of the Israel-US-Iran war is starting to have a more pronounced impact on China’s economy, despite the current ceasefire. China has been relatively insulated from the worst spillovers of the conflict, not least due to its vast strategic oil reserves and reliance on coal for its energy needs. China’s GDP grew by 5% year-on-year (YoY) in Q1 2026, exceeding market expectations. However, its trade-driven economy is affected by Iran’s continued de facto closure of the Strait of Hormuz. Higher oil prices are weighing down private consumption (which was already muted), while China’s trade is decelerating amid global supply chain disruption. In March, China’s exports rose 2.5% YoY in USD terms, which was significantly lower than the 21.8% growth recorded in January and February combined. Retail automobile sales fell by 26% from 1 to 19 April, compared to the same period last year. On 28 April, China’s Politburo pledged to institute a ‘more proactive fiscal policy and moderately loose monetary policy’ to deal with ‘external shocks’. While the government will possibly introduce more household subsidies or support for energy companies to keep prices down, any fiscal intervention is likely to remain limited in scale. Beijing will continue to push for a diplomatic resolution to the conflict, given its focus on economic growth as a key government objective. In the long term, we assess that China will seek to build self-sufficiency and to reduce its reliance on external markets.
  • INDIA: The Israel-US-Iran war will disrupt aluminium scrap supplies, raising industrial supply chain risks. On 28 April, reports indicated that India’s secondary aluminium producers are facing scrap shortages and rising costs as the Israel-US-Iran war has disrupted imports from key suppliers. India produces nearly half of its 4.2 million metric tons of aluminium through the secondary sector (recycling scrap) and relies heavily on scrap from the EU, the US and the Middle East, which accounts for around 30% of shipments. According to industry executives, scrap prices have risen by nearly 30% since the war began, reducing margins, while some plants are operating at 20-40% lower capacity because inventories have been depleted. The constrained supply is likely to affect the automotive sector, which consumes around 60% of India’s domestically produced secondary aluminium. We assess that this development highlights rising industrial supply-chain pressures in India. If disruption persists, there is a realistic possibility of reduced aluminium output, higher manufacturing costs and production delays in the automotive sector. Such disruption is likely to affect automotive manufacturers, auto-parts suppliers, packaging producers, construction material firms and electrical equipment manufacturers, with second-order effects including higher consumer prices, delayed production schedules, tighter procurement conditions and increased import dependence for finished aluminium products.

EUROPE-EURASIA 

  • EUROPE REGION: Rising aluminium prices and supply insecurity will increase operational disruption risks across several key industries, including in the automotive (notably electric vehicles), construction, packaging, aviation and renewable energy sectors. On 28 April, Reuters reported that the premium in Europe for aluminium billet has doubled since the start of the Israel-US-Iran war. Additionally, in mid-April, benchmark aluminium prices hit a record four-year price of USD 3,672 per metric ton at the London Metal Exchange (LME). Prior to the war, the Middle East accounted for approximately 9% of global aluminium production, with the EU importing approximately 14% of its aluminium products from the region. The blockade of the Strait of Hormuz has significantly disrupted aluminium and raw material exports. Moreover, Iranian strikes have damaged aluminium production infrastructure in the Middle East. As a result, production output will highly likely remain constrained in the coming months, even if the Strait of Hormuz reopens in the near future.
  • EUROPE REGION: We assess that European domestic aluminium production is unlikely to mitigate the above-mentioned price pressures and possible global shortages in the short term. Aluminium production is highly energy-intensive, while European production capacity has significantly declined since its energy crisis following Russia’s full-scale invasion of Ukraine in February 2022. The introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) in January has created an additional levy for carbon-intensive imports (such as aluminium), which has added an additional layer of price pressure on European industries. Operational disruption risks from rising prices and supply insecurity will be most pronounced for the EU’s primary aluminium importers, including Germany, Italy and the Netherlands.
  • EUROPE REGION: The adopted measures to mitigate elevated energy costs will increase fiscal health risks in multiple European jurisdictions over the coming months, driving policy risk. Data from Bruegel indicates that European governments have thus far committed approximately EUR 10.46 billion (USD 12.41 billion) in fiscal support in response to energy price pressures stemming from the Israel-US-Iran war. Approximately 80% of these measures are untargeted, including general energy excise duty or value-added tax (VAT) cuts. Such policies run counter to the European Commission (EC)’s and the IMF’s earlier guidance, which called for temporary interventions that avoid stimulating demand during periods of constrained supply. The reliance on untargeted relief measures will increase the risk of a prolonged fiscal strain.
  • EUROPE REGION: We assess that fiscal stimulus measures will increase in the coming months as governments respond to public pressure for immediate cost-of-living relief, drawing on policy precedents during the 2022 energy crisis. While previous interventions helped to support households and prevent major economic disruption, they also contributed to inflationary pressures and widening budget deficits. Furthermore, the current conditions are more restrictive than during the previous energy crisis, as several major European economies are currently experiencing weak growth or stagnation, in addition to elevated debt burdens accumulated during the Covid-19 pandemic and due to prior energy support measures. We also assess that divergences between EU member states with stronger and weaker fiscal positions will further increase in the coming months, reinforcing the EU-level policy risk and likely budgetary disagreements into 2027.

SUB-SAHARAN AFRICA 

  • NIGERIA: Amid escalating financial pressure on domestic airlines, road use will likely increase, compounding threats to staff routinely engaging in inter-city transit. On 23 April, the aviation minister announced that the federal government will review the tax structure for the aviation industry and will grant local airline operators a 30% reduction in their outstanding debts to Nigeria’s aviation authorities. Amid a 270% increase in jet fuel prices since the Israel-US-Iran war began on 28 February, the Airline Operators of Nigeria (AON; an industry body representing 40 domestic carriers) has repeatedly warned of the potential for a partial or total suspension of flights between Nigeria’s major cities. Although a total suspension remains unlikely in the short term, airlines are highly likely to increase ticket prices and reduce flights in response to sustained cost pressures. As such, inter-city road use will likely increase, with resulting congestion driving transit and supply chain delays. Local criminal entities are highly likely to capitalise on increased road usage to perpetrate frequent carjacking attacks targeting vehicles moving along major thoroughfares, including those between the capital Abuja and Lagos (Lagos state). In Nigeria’s Middle Belt region, local armed groups (known as bandits) are also highly likely to continue targeting vehicles and convoys engaging in overland movement with kidnap-for-ransom (KFR) attacks. Militant groups such as Boko Haram and Islamic State – West Africa Province (ISWAP) are highly likely to capitalise on similar opportunities in northern Nigeria. Such conditions will increase risks of exposure to ambush, KFR and violent crime for staff routinely engaging in overland movement in lieu of airline travel, particularly when transiting rural areas without security escorts.
  • REGION: The likely rise in regional petrol and diesel prices in the coming week will compound operational disruption and unrest risks. In the first week of May, several states across the region (most notably Malawi and South Africa) will announce new petrol and diesel prices for the subsequent month. Amid ongoing maritime disruption in the Strait of Hormuz, several states are likely to raise official prices. In the coming days, consumers are likely to stockpile supplies in anticipation of a potential rise, exacerbating the risk of shortages in the ensuing weeks. The highly likely increase in regional prices will raise cross-sector operational costs while compounding existing disruption to overland supply chains. States will possibly initiate or extend existing measures to shield consumers from the price hike (such as reducing VAT or increasing fuel subsidies), though these measures are likely to be ineffective in moderating the impacts of the rise. This is likely to depress economic activity across the region, while the likely extension of fuel rationing measures in several states is also likely to undermine the functionality of public sector services. Deteriorating conditions are likely to elevate region-wide unrest risks in the coming weeks, with anti-government protests particularly likely in Kenya and Madagascar amid entrenched tensions between the government and civil society entities. We assess that this will increase staff and asset exposure to clashes between protesters and the police and to possible instances of looting and vandalism in central areas of major cities.

KEY DEVELOPMENTS 

  • IRAN-US: The deadlock between the US and Iran will likely persist in the coming days, maintaining upwards price pressure on global markets.
  • UAE: The UAE’s exit from OPEC will likely prompt a partial increase in local oil production in the coming weeks, though a major positive impact on global oil market prices is unlikely as long as the Strait of Hormuz remains blocked.
  • CHILE: Restrictions on Chinese sulphuric acid shipments will increase operational disruption risks for Chilean copper producers, in turn exacerbating global supply chain risks.
  • CHINA: The impact of the Israel-US-Iran war is starting to have a more pronounced impact on China’s economy, despite the current ceasefire.
  • EUROPE REGION: Rising aluminium prices and supply insecurity will increase operational disruption risks across several key industries, including in the automotive (notably electric vehicles), construction, packaging, aviation and renewable energy sectors.
  • SUB-SAHARAN AFRICA REGION: The likely rise in regional diesel and fuel prices in the coming week will compound operational disruption and unrest risks

MIDDLE EAST, NORTH AFRICA AND TURKEY

  • IRAN-US: The deadlock between the US and Iran will likely persist in the coming days, maintaining upwards price pressure on global markets. On 29 April, US President Donald Trump issued further demands for Iran to agree to the US’ ceasefire proposals, amid a protracting diplomatic deadlock and the diminishing prospects for productive negotiations. The statement came shortly after the Wall Street Journal published a report indicating that Trump has directed aides to prepare for the indefinite extension of the US’ blockade of Iranian ports, which aims to maximise economic pressure on Iran. Although this blockade will almost certainly continue to increase economic pressure on Iran in the coming days and weeks, Iran is highly likely to sustain its efforts to bypass the blockade covertly via alternative trade routes, including rail and road networks (see Sibylline Middle East Crisis Update – 27 April 2026). Although these efforts are unlikely to mitigate the economic pressure on Tehran entirely, they will lessen the effectiveness of Washington DC’s moves to secure concessions, moderating the prospects for a bilateral diplomatic breakthrough in the coming days. Consequently, Iran is highly likely to maintain its de facto closure of the Strait of Hormuz in the short term. This will critically disrupt maritime supply chains and maintain upward price pressure on global energy and commodity markets.
  • UAE: The UAE’s exit from OPEC will likely prompt a partial increase in local oil production in the coming weeks, though a major positive impact on global oil market prices is unlikely as long as the Strait of Hormuz remains blocked. On 28 April, the UAE announced it would quit OPEC and OPEC+ effective from 1 May. The Emirati government stated that its decision focused on national interest and reflected its economic vision and evolving energy profile. The move is highly likely to impact OPEC’s strategy significantly over the next two years, as the UAE had held the second-highest spare production capacity in the organisation after Saudi Arabia. Free of OPEC production constraints, the UAE will now be able to target an output of up to 4.9 million barrels per day (bpd). This is likely to exert partial downward pressure on global oil prices while increasing market entry opportunities for energy investors in the country. However, we assess that any immediate production increase is unlikely to impact oil market prices materially in the coming weeks, as disruption in the Strait of Hormuz persists and the UAE’s alternative Habshan–Fujairah pipeline is already operating at near its maximum capacity of 1.5 million bpd. Beyond the energy sector, the Emirati decision will almost certainly heighten already elevated tensions and economic rivalry with Saudi Arabia, augmenting the risk of diplomatic fallout in the coming months. This competition is unlikely to remain limited to energy and will increasingly extend to the technology, finance and tourism sectors, as firms face growing pressure to make a strategic choice between anchoring their regional operations in the Saudi capital, Riyadh, or in the UAE capital, Abu Dhabi, once the current conflict subsides. Additionally, there is a realistic possibility that the UAE will exit the Gulf Cooperation Council (GCC) should tensions with Saudi Arabia persist throughout 2026. In such a scenario, the operating environment for companies active across the Gulf would be significantly reshaped, driving heightened strategic, regulatory and operational risks. Mutually exclusive localisation requirements, procurement eligibility rules and regional headquarters mandates would likely increase the financial, legal and regulatory exposure for new and existing firms with operations across the region.
  • EGYPT: The government’s easing of energy-saving measures will moderate financial risks for businesses. On 26 April, Egypt’s government lifted nationwide energy-saving measures introduced approximately one month earlier in response to rising energy prices caused by the Israel-US-Iran war. Cafes and restaurants are now permitted to operate until 0100hrs (local time), while shops and malls can remain open until 2300hrs on weekdays and 0000hrs on weekends. The extended operating hours and restored footfall will moderate financial risks, particularly in the tourism and hospitality sector. The lifting of lighting restrictions will also reduce the risk of late-night collisions, moderating safety risks for in-country personnel travelling after daylight hours. More broadly, the reversal will moderate domestic unrest risks, given that the curfew had disproportionately impacted low-income and informal economy workers in an already-strained socio-economic environment. However, a collapse of the ceasefire in the coming weeks remains a realistic possibility, which would possibly prompt renewed attacks on regional energy infrastructure and drive Egypt to reimpose rationing measures.

AMERICAS 

  • CHILE: Restrictions on Chinese sulphuric acid shipments will increase operational disruption risks for Chilean copper producers, in turn exacerbating global supply chain risks. Chinese customs data indicated that there were no exports of sulphuric acid to Chile in March for the first time since July 2023. This follows earlier reports that China was considering an export ban on sulphuric acid to prioritise domestic supply. Chile was China’s largest export market for sulphuric acid in 2025. Chile relies on sulphuric acid to produce refined copper via copper leaching. Given Chile’s status as the world’s largest copper producer, sulphuric acid shortages would increase the risk of disruption to refined copper production, particularly copper cathodes. The state-owned mining firm Codelco reported that it retains enough acid to last the rest of 2026; however, Codelco is only responsible for approximately 30% of Chile’s copper mining output. Although shortages are unlikely in the coming weeks, decreases in Chile’s refined copper output will increase supply chain disruption risks for the electric vehicle (EV), renewable energy and industrial manufacturing industries, particularly those in China and the US.
  • US: Fluoride shortages driven by the conflict will increase public health risks in the short term. Reports indicate that fluoride shortages have prompted some local governments to reduce their use of the agent in water supplies. At least two major water supply systems in Maryland, which serve Baltimore (Maryland) and suburban areas around the capital Washington DC, have reduced fluoride concentrations in their supplies. Elsewhere, the borough of Lititz (Pennsylvania) has halted fluoridation for several weeks due to shortages. Fluoride is widely used to improve dental health; therefore, any sustained shortages or reduced fluoridation will increase public health risks in affected areas.

ASIA-PACIFIC

  • CHINA: The impact of the Israel-US-Iran war is starting to have a more pronounced impact on China’s economy, despite the current ceasefire. China has been relatively insulated from the worst spillovers of the conflict, not least due to its vast strategic oil reserves and reliance on coal for its energy needs. China’s GDP grew by 5% year-on-year (YoY) in Q1 2026, exceeding market expectations. However, its trade-driven economy is affected by Iran’s continued de facto closure of the Strait of Hormuz. Higher oil prices are weighing down private consumption (which was already muted), while China’s trade is decelerating amid global supply chain disruption. In March, China’s exports rose 2.5% YoY in USD terms, which was significantly lower than the 21.8% growth recorded in January and February combined. Retail automobile sales fell by 26% from 1 to 19 April, compared to the same period last year. On 28 April, China’s Politburo pledged to institute a ‘more proactive fiscal policy and moderately loose monetary policy’ to deal with ‘external shocks’. While the government will possibly introduce more household subsidies or support for energy companies to keep prices down, any fiscal intervention is likely to remain limited in scale. Beijing will continue to push for a diplomatic resolution to the conflict, given its focus on economic growth as a key government objective. In the long term, we assess that China will seek to build self-sufficiency and to reduce its reliance on external markets.
  • INDIA: The Israel-US-Iran war will disrupt aluminium scrap supplies, raising industrial supply chain risks. On 28 April, reports indicated that India’s secondary aluminium producers are facing scrap shortages and rising costs as the Israel-US-Iran war has disrupted imports from key suppliers. India produces nearly half of its 4.2 million metric tons of aluminium through the secondary sector (recycling scrap) and relies heavily on scrap from the EU, the US and the Middle East, which accounts for around 30% of shipments. According to industry executives, scrap prices have risen by nearly 30% since the war began, reducing margins, while some plants are operating at 20-40% lower capacity because inventories have been depleted. The constrained supply is likely to affect the automotive sector, which consumes around 60% of India’s domestically produced secondary aluminium. We assess that this development highlights rising industrial supply-chain pressures in India. If disruption persists, there is a realistic possibility of reduced aluminium output, higher manufacturing costs and production delays in the automotive sector. Such disruption is likely to affect automotive manufacturers, auto-parts suppliers, packaging producers, construction material firms and electrical equipment manufacturers, with second-order effects including higher consumer prices, delayed production schedules, tighter procurement conditions and increased import dependence for finished aluminium products.

EUROPE-EURASIA

  • EUROPE REGION: Rising aluminium prices and supply insecurity will increase operational disruption risks across several key industries, including in the automotive (notably electric vehicles), construction, packaging, aviation and renewable energy sectors. On 28 April, Reuters reported that the premium in Europe for aluminium billet has doubled since the start of the Israel-US-Iran war. Additionally, in mid-April, benchmark aluminium prices hit a record four-year price of USD 3,672 per metric ton at the London Metal Exchange (LME). Prior to the war, the Middle East accounted for approximately 9% of global aluminium production, with the EU importing approximately 14% of its aluminium products from the region. The blockade of the Strait of Hormuz has significantly disrupted aluminium and raw material exports. Moreover, Iranian strikes have damaged aluminium production infrastructure in the Middle East. As a result, production output will highly likely remain constrained in the coming months, even if the Strait of Hormuz reopens in the near future.
  • EUROPE REGION: We assess that European domestic aluminium production is unlikely to mitigate the above-mentioned price pressures and possible global shortages in the short term. Aluminium production is highly energy-intensive, while European production capacity has significantly declined since its energy crisis following Russia’s full-scale invasion of Ukraine in February 2022. The introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) in January has created an additional levy for carbon-intensive imports (such as aluminium), which has added an additional layer of price pressure on European industries. Operational disruption risks from rising prices and supply insecurity will be most pronounced for the EU’s primary aluminium importers, including Germany, Italy and the Netherlands.
  • EUROPE REGION: The adopted measures to mitigate elevated energy costs will increase fiscal health risks in multiple European jurisdictions over the coming months, driving policy risk. Data from Bruegel indicates that European governments have thus far committed approximately EUR 10.46 billion (USD 12.41 billion) in fiscal support in response to energy price pressures stemming from the Israel-US-Iran war. Approximately 80% of these measures are untargeted, including general energy excise duty or value-added tax (VAT) cuts. Such policies run counter to the European Commission (EC)’s and the IMF’s earlier guidance, which called for temporary interventions that avoid stimulating demand during periods of constrained supply. The reliance on untargeted relief measures will increase the risk of a prolonged fiscal strain.
  • EUROPE REGION: We assess that fiscal stimulus measures will increase in the coming months as governments respond to public pressure for immediate cost-of-living relief, drawing on policy precedents during the 2022 energy crisis. While previous interventions helped to support households and prevent major economic disruption, they also contributed to inflationary pressures and widening budget deficits. Furthermore, the current conditions are more restrictive than during the previous energy crisis, as several major European economies are currently experiencing weak growth or stagnation, in addition to elevated debt burdens accumulated during the Covid-19 pandemic and due to prior energy support measures. We also assess that divergences between EU member states with stronger and weaker fiscal positions will further increase in the coming months, reinforcing the EU-level policy risk and likely budgetary disagreements into 2027.

 

 

 

 

Figure 2: Fiscal stimulus measures across selected EU member states aimed at reducing the Israel-US-Iran war’s impact on energy prices; Spain accounts for almost 50% of the total amount; source: Bruegel

 

 

 

SUB-SAHARAN AFRICA – click here to return to Key Developments

  • NIGERIA: Amid escalating financial pressure on domestic airlines, road use will likely increase, compounding threats to staff routinely engaging in inter-city transit. On 23 April, the aviation minister announced that the federal government will review the tax structure for the aviation industry and will grant local airline operators a 30% reduction in their outstanding debts to Nigeria’s aviation authorities. Amid a 270% increase in jet fuel prices since the Israel-US-Iran war began on 28 February, the Airline Operators of Nigeria (AON; an industry body representing 40 domestic carriers) has repeatedly warned of the potential for a partial or total suspension of flights between Nigeria’s major cities. Although a total suspension remains unlikely in the short term, airlines are highly likely to increase ticket prices and reduce flights in response to sustained cost pressures. As such, inter-city road use will likely increase, with resulting congestion driving transit and supply chain delays. Local criminal entities are highly likely to capitalise on increased road usage to perpetrate frequent carjacking attacks targeting vehicles moving along major thoroughfares, including those between the capital Abuja and Lagos (Lagos state). In Nigeria’s Middle Belt region, local armed groups (known as bandits) are also highly likely to continue targeting vehicles and convoys engaging in overland movement with kidnap-for-ransom (KFR) attacks. Militant groups such as Boko Haram and Islamic State – West Africa Province (ISWAP) are highly likely to capitalise on similar opportunities in northern Nigeria. Such conditions will increase risks of exposure to ambush, KFR and violent crime for staff routinely engaging in overland movement in lieu of airline travel, particularly when transiting rural areas without security escorts.
  • REGION: The likely rise in regional petrol and diesel prices in the coming week will compound operational disruption and unrest risks. In the first week of May, several states across the region (most notably Malawi and South Africa) will announce new petrol and diesel prices for the subsequent month. Amid ongoing maritime disruption in the Strait of Hormuz, several states are likely to raise official prices. In the coming days, consumers are likely to stockpile supplies in anticipation of a potential rise, exacerbating the risk of shortages in the ensuing weeks. The highly likely increase in regional prices will raise cross-sector operational costs while compounding existing disruption to overland supply chains. States will possibly initiate or extend existing measures to shield consumers from the price hike (such as reducing VAT or increasing fuel subsidies), though these measures are likely to be ineffective in moderating the impacts of the rise. This is likely to depress economic activity across the region, while the likely extension of fuel rationing measures in several states is also likely to undermine the functionality of public sector services. Deteriorating conditions are likely to elevate region-wide unrest risks in the coming weeks, with anti-government protests particularly likely in Kenya and Madagascar amid entrenched tensions between the government and civil society entities. We assess that this will increase staff and asset exposure to clashes between protesters and the police and to possible instances of looting and vandalism in central areas of major cities. (Source: Sibylline)

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Founded in 1987, Exensor Technology is a world leading supplier of Networked Unattended Ground Sensor (UGS) Systems providing tailored sensor solutions to customers all over the world. From our Headquarters in Lund Sweden, our centre of expertise in Network Communications at Communications Research Lab in Kalmar Sweden and our Production site outside of Basingstoke UK, we design, develop and produce latest state of the art rugged UGS solutions at the highest quality to meet the most stringent demands of our customers. Our systems are in operation and used in a wide number of Military as well as Home land Security applications worldwide. The modular nature of the system ensures any external sensor can be integrated, providing the user with a fully meshed “silent” network capable of self-healing. Exensor Technology will continue to lead the field in UGS technology, provide our customers with excellent customer service and a bespoke package able to meet every need.

A CNIM Group Company

 

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