I suspect that it may have been one of the most momentous telephone calls of recent decades. Someone in Iran who knew the movements of the very top leadership of the country called or texted their handler in Israel and informed them that the Supreme Leader and several of his top officials were meeting in Tehran. The decision was taken to act on the information. At some point the US was informed. At some later point, the US decided to become involved in what has come to be known as the Iran War1 (Marco Rubio said “We knew that that would precipitate an attack against American forces, and we knew that if we didn’t pre-emptively go after them before they launched those attacks, we would suffer higher casualties.”) Presumably there was a pre-existing list of targets in Iran and the bombing quickly started (unfortunately one of them turned out to have been part of an army base that had been turned into a school for girls, and which was obliterated by Tomahawk missiles, killing around 170).
Iran is a proud country with more than 6000 years of history, significant oil and gas wealth, a population of 90m people dispersed over an area as large as France, Germany, Spain, and the UK combined, total military personnel of up to a million, relatively recent experience of fighting a multi-year conflict (the 1980 - 88 Iran-Iraq War in which 500,000 people were killed2), a plethora of soft targets within missile and drone range, and complete control of the Straits of Hormuz. This is not a soft target. However, the country’s fanatical and hard-line theocratic rulers had made progress towards obtaining nuclear technology (despite US bombing during the ‘12-day War’ of 2025), and had expressed their intention to eliminate Israel. Whatever your views on the reasons for and wisdom or otherwise of the conflict, it’s impossible to think that this is going to be over soon. Russia’s war on Ukraine has been going on for more than four years now. It’s even more unlikely that the Straits of Hormuz will be opened quickly, and that matters to the global cement industry for many reasons.
As a consequence of the closure of the Strait, oil and gas prices have spiked - but all energy prices have risen, since in the absence of the 20% of the world’s oil and gas that passed through the strait, demand for all other forms of energy has increased too. Unfortunately, an energy price spike is the last thing that weak global economies need right now – and it will have significant echoing effects on the global cement industry, too. As we heard in the three articles in this issue about the US cement industry, the inflationary effects of the Iran War (coupled with the inflationary effects of Mr Trump’s tariffs) mean that interest rates are unlikely to fall in the US (and in many other countries) and may yet increase. This will dampen economic activity and construction markets in particular, reducing demand for building materials including cement. So, we are likely to have a cement demand shock, on the back of a softening in global economic activity. Energy shocks have been known to cause severe recessions.3
The sharp increase in energy prices will have other knock-on effects in the global cement industry. The process of diversifying your energy mix – especially to include locally-sourced alternative fuels (AF) – is looking increasingly wise. Even cement companies in Saudi Arabia, which had previously had access to cheap fuel oil, will be scrambling to use AF if the country’s refineries are targeted and put partially out of action. (If Iran targets Saudi Arabia’s oil infrastructure, then the global energy price spike will go through the roof). The rest of us, who always had to pay the full market price for energy, will find new pain with every new energy bill. AF will be given a massive boost around the world, and I predict a newfound interest in landfill-mining for energy (we organised a series of conferences on this starting in 2010).
The other knock-on effect will be on the cement industry’s decarbonisation and sequestration efforts. Before the start of the Iran War, politicians in the EU, including Germany’s Chancellor Merz, had started to hint that the EU ETS might be loosened in the hope of increasing Europe’s competitiveness. CO2 prices dropped immediately. With energy prices increasing, you can expect those voices to become louder. Lower CO2 prices (and/or extended free allowances) will undercut the industry’s resolve to decarbonise, since the savings will just not be there - despite urgency for the climate’s sake. On the other side of the coin, energy-intensive carbon capture processes will become disadvantageous. That’s not to say that CCUS will not happen (it may just be delayed), but less energy-intensive carbon capture technologies will now be even more strongly favoured. No doubt there will be other unforeseen consequences of the Iran War
1 https://en.wikipedia.org/wiki/2026_Iran_war
2 https://en.wikipedia.org/wiki/Iran–Iraq_War–Iraq_War
3 https://en.wikipedia.org/wiki/1970s_energy_crisis
