‘If the conflict between the US, Israel and Iran continues, there will be consequences for the Balearics.’ This is the warning issued by experts consulted by Ultima Hora regarding the impact that the US and Israeli attack on Iran could have on the islands’ economy. In fact, in the early hours of 2 March, it had already risen sharply, by up to 13%, before moderating to a 6% increase. The upward trend is expected to continue today, Monday, due to the threat of closure of the Strait of Hormuz.
The president of the Balearics Service Station Federation, Joan Mayans, considers the Strait of Hormuz to be strategic for global oil supplies, although he points out that this may be offset by OPEC’s announcement on Sunday that it will increase oil production. In his view, we will have to wait and see how the markets react and whether or not this situation continues for a long time.
Luis García Langa, director of Markets at SDC Analistas, states that ‘the initial impact is negative’. On this point, he argues that ‘the possible closure of the Strait of Hormuz by Iran, as well as other routes that may be controlled by the Iranians, could cause a significant rise in the price of oil. Thirty per cent of the oil that reaches the rest of the world passes through there’. However, he points out that on Sunday, OPEC+, led by Saudi Arabia and Russia, announced that it would increase crude oil production by 206,000 barrels per day, ‘in view of the stable outlook and low oil reserves’, without mentioning the war with Iran, which is keeping the markets on edge.
Pau A. Monserrat, member of the CES, professor at the UIB and economist at Futur Legal, adds that ‘the increase in the price of oil would have a direct impact on airline costs and, therefore, on what it would cost a tourist to come to the Balearic Islands.’ In his view, ‘this would be unfavourable to our interests.’ However, he points out that for this to happen, the conflict would have to be prolonged. ‘It is still too early to make predictions,’ he adds.
Nevertheless, Langa believes that the rise in fuel prices would have positive consequences for the Balearics. ‘Iranian attacks on areas with a certain tourist connection could, in the best-case scenario, lead to more tourists coming to the Balearics because it is a peaceful area. We have no shortage of tourists with low purchasing power, but high-quality tourism that goes to Dubai or Qatar could be diverted to the islands.’
Economist Pep Ignasi Aguiló argues that ‘the consequences will depend on what happens in the next few hours. If Donald Trump’s strategy succeeds, there will be a historic change in the Middle East, which will undoubtedly be for the better. If the Ayatollah regime falls, the area could become a hub of prosperity.’ On the contrary, he warns that ‘if the strategy to overthrow the regime becomes entrenched, it could be very negative for the global economy.’ However, he points out that ‘at the moment, it seems much more likely that it will be brief and, in that case, very beneficial.’