When hostilities end, the situation reverses; even if conflicts become entrenched, as happened with the wars in Iran and Afghanistan. I could be wrong, but while the oil barrel exceeded $73 throughout 2023, peaking at $97, Mexico's and the world's GDP grew, and stock markets revalued. In fact, it is likely that oil will fall below pre-war levels. In the nine major oil-related regional wars since 1980, the dollar price of crude was higher one month after the conflict began, but six and twelve months later, it was 4% and 5%, respectively, below its previous levels. The reason is that oil usually rises before a war, as tensions escalate. As is well known, 20% of the world's oil passes through the Strait of Hormuz, so its blockade by Iran poses a problem. As this reality sets in, gas price hikes should correct themselves. Markets will soon start to discount the reopening of the Strait of Hormuz. In the face of the war in Iran, it is logical to ask whether it will affect Mexico's economic growth and stock market. It is a fairly widespread fear, but before panic spreads, let's review history to reveal a hidden reality: regional wars rarely have a lasting impact on the stock market or oil prices. Gas mainly comes from Norway and the United States, while Qatar, whose possible supply disruption has made headlines, contributes only 4% of Europe's imported gas. Specifically, Mexico's GDP grew by an impressive 23%. Furthermore, most Persian oil stays in the country or is sent to China, which increased its purchases by 16% in January and February, probably to build up reserves. The more serious problem is oil transportation. A price above $100 was also not a problem in the early 2010s. However, stock markets are cold and do not hesitate to anticipate the global economic consequences of a conflict, which are usually less severe than initially feared. Therefore, the fall in the BMV index should not take long to reverse to regain the year's early gains. Concern also seems excessive in Europe, as only 3.5% of its oil and 4% of its gas pass through Hormuz. Still, about a third of that 20% enters the strait for processing, not for export. The fears are excessive, which bodes well for positive surprises in Mexico and the rest of the world. In both cases, the magnitudes are hardly relevant. Concerns are focused on oil and its possible repercussions on stocks and GDP. Therefore, it is not true that a fifth of the world's supply has evaporated. Instead, let's analyze the facts. Iran is not a major oil producer, as before the war it only contributed 3% of world production. Now, it is simply being redirected, as there are alternative pipelines for almost a third of the oil affected by the Hormuz situation. If the war drags on until August, Trump's Republican Party could suffer significant wear and tear in the November midterm elections. Moreover, the rise in oil prices would be a boost for Pemex, and considering the inflation of the current decade, a $100 barrel today is equivalent to a $70-80 barrel before the pandemic. On the other hand, the political consequences for the United States could be considerable. Nevertheless, analysts had estimated that in 2026 there would precisely be a 3% surplus in supply, so the Iranian share would be compensated. Currently, patience is the most valuable asset. The cost in human lives from armed conflicts is a true tragedy. A long war would reinforce that trend, which would probably encourage Trump to end the war as soon as possible. So, stay calm as chaos prevails in the global landscape. As I pointed out in January, these elections usually favor the party opposite the president in office. We are not in 2022, when, due to a lack of sufficient terminals to unload liquefied natural gas, the European Union had difficulty replacing Russian exports. The stock market will not take long to regain its balance. But it is not advisable to be carried away by fear. Hence the fall in the BMV in March, caused by investors' fear that the rise in crude prices would affect Mexico's national industry and materials sectors, which are energy-intensive. Currently, this is not the case. Iran barely represents 0.3% of the world's GDP, while the percentage rises to 3.5% for the set of countries affected by the conflict.
