This is Bad

Hi, welcome back to the channel. In today's episode I want to provide you with an update on something that is starting to become a really big issue on the global economy as a result of the ongoing war in Iran. Now while most of the focus, not surprisingly, has been on oil and has been on the impact on oil and gas supplies as a result of the effective closure of the Strait of Hormuz, which has been strangling the network for the last month or so, we are now starting to see shortages of critical materials emerging across the world. And these are not minor products, these are absolutely essential inputs into global industry, food production and technology, and if these shortages continue they could have a really serious impact on inflation, supply chains and global growth throughout the rest of this year. But before we get into the details of this, can I ask anybody that hasn't subscribed yet to please hit that subscribe button, it really does help me with the algorithm, also puts a smile on my face. Now let's start with what I think is probably the most surprising of all of the shortages, helium. Now most people associate helium with party balloons and making your voice quite squeaky if you do suck into the balloon, but in reality helium is a critically important industrial gas. It's used in semiconductor manufacturing, in MRI scanners, in aerospace technology, fibre optics and a whole range of high-tech applications. And crucially it plays a key role in the production of advanced silicon chips. So this sits right at the heart of industries such as artificial intelligence, electronics, automotive manufacturing and defence. Now the global helium market is already very tight. Supply mainly comes from a small number of countries including the USA, Qatar and Algeria. And Qatar in particular is one of the world's largest exporters. So any disruption in the region, whether it's damage to infrastructure, export restrictions or problems with shipping routes, immediately reduces global supply. At the same time demand for helium continues to increase, driven primarily by the growth in artificial intelligence, semiconductors and healthcare usage. So what we're now seeing is a classic supply-demand squeeze. So we've got steady demand and reduced supply. And executives are already warning that this is starting to impact on global tech supply chains, which means higher production costs, delays in manufacturing and potentially shortages of chips. And I'm not talking the food variety. And if that happens it feeds directly into higher prices for electronics, vehicles and a wide range of consumer goods. Basically chips are in everything these days. So this is a really important development that goes far beyond balloons. This is about the backbone of the modern digital economy. And helium is just one example. We're also starting to see pressure building in other industrial gases and specialist materials used in manufacturing. Because a lot of these gases are produced in energy intensive processes. And with energy markets being disrupted, production costs are rising and output is becoming less reliable. So this is not just about one isolated shortage. It's the beginning of a broader tightening across multiple critical inputs. Now let's move on to the second major story which relates to fertilizers. Russia has announced restrictions on exports of ammonium nitrate for a period of around one month. Whilst that might sound like a short-term measure, it's actually very significant. Because Russia is one of the world's largest fertilizer exporters in the world. And in fact the sanctions that are in place against Russia don't apply to many of its fertilizers because they're needed globally. And ammonium nitrate is a key component used in agriculture. It's used to boost crop yields and is absolutely essential for large-scale food production. It's also used in mining and certain industrial applications. But its primary importance is in global food supply. Now in terms of whether this is just restricted to Russia, the answer is no. Russia is the latest country to impose restrictions. But the fertilizer market has already been under some pressure for some time. We've seen export restrictions previously from countries like China. Production cuts in Europe due to high gas prices and ongoing disruption to supply chains linked to geopolitical tensions. Because fertilizer production is heavily dependent on natural gas. When natural gas prices rise, supply is disrupted. And as you know the Strait of Hammock's being closed has disrupted gas supplies. Fertilizer production then becomes more expensive and in some cases uneconomic. So what Russia is doing here is effectively tightening an already constrained market. And the official explanation is that this is to stabilize domestic supply and keep prices under control within Russia. But in reality this is happening in the context of war, sanctions and broader economic pressures. So Russia is prioritizing its own domestic needs over exports and the global implications of this are significant. Because when fertilizer supply is reduced, farmers either have to pay higher prices or they use less fertilizer. And when that happens crop yields fall which leads to lower food production and that feeds directly into higher global food prices. So once again this is not just an industrial issue. This has direct consequences for inflation, food security and particularly in developing economies. We've seen in previous crises that fertilizer shortages can take months to fully feed through the system. But when they do the impact can be severe. Now when you take a step back and look at the bigger picture here, what we are seeing is the emergence of a broader supply shock. We've got disruption to shipping routes particularly around the Strait of Hammock's which is increasing costs and delaying deliveries. We've got rising energy prices feeding into higher production costs across multiple industries. And we've now got shortages or restrictions affecting critical materials like helium and fertilizers. And all of this is connected because higher energy costs impact production, production issues impact supply and supply shortages push up prices. This creates a cycle of persistent inflationary pressure and slower economic growth. And that's why this story is so important because it shows that the impact of the war in Iran is no longer confined to just oil and gas. It's now spreading into multiple areas of the global economy. And if these trends continue we could be looking at a much more prolonged period of disruption than many people had expected. So the key takeaway from all of this is that we are now seeing early stages of a wide global supply shock. And that has implications not just for the markets but for businesses, consumers and governments all around the world because this situation is still evolving and the economic consequences are becoming more serious day by day. So I'll keep you posted on any further news and developments on this and related stories. And if you've liked what I've said today or maybe you didn't like it but you just thought it was interesting then please give me a thumbs up. Hopefully you found it useful, informative and thought-provoking. That's what I'm trying to do, provoke some thoughts, get you thinking about how something that's happening thousands of miles away from where you live that you thought would have no relevance on your life is actually starting to impact on your household budget and could just cause everything to become more expensive. So hopefully you're starting to put the pieces together to see how the global economy actually fits. Now if you haven't done so already please subscribe to the channel. Don't forget I'm currently running my competition where you can win my property or a cash alternative prize. If you have a look at the QR code on the screen now or click the link in the description below you can get involved in that. I've got some exciting deals on the go right now. It's another way of helping to fund the channel. Thank you also to everybody that's supporting me in other ways. If you've bought me a coffee or sent me YouTube super thanks or signed up as a patron or a member I really appreciate that support. Thank you so much, helps to keep me motivated, keep me posting more videos and here's something to put a smile on your face.