Nournews: In June, global oil prices surged by 20%, reaching around $77 per barrel. Analysts at Goldman Sachs believe that approximately $10 of this increase is due to a "risk premium" directly linked to geopolitical instability in the region. With the Middle East on the brink of broader conflict, even a minor spark in the Strait of Hormuz could upset the global oil supply balance.
The psychological threshold of $100: Global ramifications
A Reuters report suggests that if tensions in the Middle East escalate and oil exports through the Strait of Hormuz are disrupted, crude prices could easily surpass $100 per barrel. This upward trajectory would affect not only energy markets but the global economy at large. Rising energy costs would directly increase production, transportation, and basic goods prices—potentially pushing developed nations toward stagflation.
The U.S. economy under oil’s shadow
In the United States, even $75 oil is enough to raise inflation from the current 3% to around 3.5% by year’s end. Compounding the issue, the U.S. dollar has depreciated by nearly 9% against major global currencies since the beginning of the year—making imports more expensive and fueling inflation. Higher oil prices could complicate the Federal Reserve’s monetary tightening policies and delay any potential rate cuts.
Strategic threat in the Strait of Hormuz
The Strait of Hormuz—through which millions of barrels of oil pass daily—has once again become a flashpoint for strategic tensions. Experts warn that even limited threats could push insurers, shipping companies, and major energy producers toward more cautious policies. This would tighten global supply and send markets into a volatile phase.
A challenge to global economic recovery
Rising oil prices could jeopardize the fragile global recovery after years of inflation, the pandemic, and high interest rates. Newly emerging economies, just beginning to enter a path of sustainable growth, may suffer the most from this price surge. In essence, expensive oil might prove to be the missing piece that unravels the delicate balance of the global economy.
NOURNEWS