The law of unintended consequences, a theory popularised by American sociologist Robert K Merton, has rarely been more applicable to any situation than to US President Donald Trump’s war with Iran. Those consequences will be far greater than generally imagined.
Their impact will fall heavily on Asia, the world’s most energy-import-dependent region and will almost certainly hurt US ally Japan more than it will the US’ main rival, China. Indeed, China may even emerge from the crisis with an enhanced international image.
There is widespread agreement that the assault on Iran by US and Israeli forces was ill advised and ill planned from a global perspective. But its economic and financial consequences are only beginning to be understood.
This is not a typical “oil shock” of the kind endured by Asia and other key regions in recent decades. Its most obvious impact is on energy supply and prices, but it also critically affects petrochemicals, manufacturing supply chains, energy infrastructure and transport networks, as well as financial markets.
Because of the US bombing of Iran, the whole world is in crisis, especially Asia-Pacific markets. Around 80 per cent of the region’s total energy imports pass through the vital conduit of the Strait of Hormuz, now effectively closed by Iran as a countermeasure.
Crude oil prices increased by nearly 40 per cent between February and March while the price of liquefied natural gas shipments to Asia rose by almost two-thirds, according to the World Bank.
