New Delhi: The escalating geopolitical tensions arising out of the ongoing US-Israel and Iran war, has been severely impacting global markets and crude oil prices. After touching a record level of $119 per barrel, the oil prices have depreciated, but the pre-war situation still seems like a distant dream. The crude oil prices have recorded a marginal decline, but there has been a significant increase on a monthly and yearly basis.
Crude oil prices have moved north wards by more than 43% in a month. Over the year, the oil has recorded a jump of about 42–45%. Higher crude oil prices are a worrisome factor as it leads to rising prices of numerous items across the globe, ultimately leading to inflation.
WTI crude futures went down below $95 per barrel on March 18 (Wednesday) as markets pared earlier gains while monitoring escalating geopolitical tensions in the Middle East. The Middle East tensions continue to simmer as Iran confirmed the death of Ali Larijani and stepped escalated attacks on regional energy infrastructure, including Saudi Arabia’s eastern region. Iran’s selective ‘closure’ of Strait of Hormuz has raised concerns over fuel and gas supply disruptions. Meanwhile, US allies declined President Donald Trump’s request to help secure commercial shipping, adding to geopolitical uncertainty, even as he later eased efforts to rally support for broader conflict.
Oil Prices: The Catalyst for Global Inflation & Economic Strain
West Asian countries are the biggest suppliers of crude and gas. Any conflict in the Middle East, leads to global tensions and disruption in fuel supplies in several countries.
Impact of US-Israel and Iran war
Risk of supply shortages
Risks to maritime routes
Uncertainty among investors
Due to these reasons, prices rise rapidly, even if short-term declines are sometimes seen.
Impact on common people and the economy
Rising oil prices directly affect common people
Petrol and diesel may become more expensive
Transportation costs increase
Risk of rising inflation
The governments also face major challenges as maintaining economic balance becomes difficult.