Boom in Beirut
You hear that? Lebanon’s Port of Beirut just went up in a plume of sulphuric smoke as old, flammable ammonium nitrate, which is fertilizer, pressurized at the depot. The frightening footage is doing the rounds among investors. The death toll is estimated to be above 100.
The impact of the blast on markets has been muted, but the price of Brent Crude oil did spike as fears over instability in the oil-rich region took over. The fertilizer at the depot was overdue disposal, so the fear now is that unsettled other countries will curb trade in the region.
Lebanon was in a state of economic turmoil before the blast. It’s never a good sign when bank notes of a local currency ascend in multiples of ten; inflation has gotten so bad there that a slumping Lebanese pound has propelled record numbers into poverty.
The nation has been hit especially hard by coronavirus, and had a $10 billion bailout request rejected by the International Monetary Fund (IMF). The Fund is worried this won’t be the last mushroom cloud in the Middle East, as such aid is channeled to Iran-backed Hezbollah.
The International Monetary Fund might have no choice but to chance it if things worsen. It takes a small fight over resources for the dominoes to start falling, so keep a close eye on that oil price as investors observe from around the world!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.