Iranian authorities have issued a stark warning that oil prices could soar to $200 a barrel as the Islamic Republic steps up its military campaign in the strategic Strait of Hormuz, vowing to halt all oil shipments to the United States and its allies.
The warning comes as at least three vessels were hit by shells in the vital chokehold on Wednesday, March 11.
Rising prices to $200 per barrel have impacts that go beyond geopolitical saber-rattling and directly affect household budgets around the world.
The most immediate impact affects drivers around the world.
It is expected that gasoline prices could rise in the United States to exceed $6 per gallon. Europeans, who already pay between $6 and $8 per gallon with taxes, may see prices reaching $10 or more.
In developing countries in the region, fuel costs could become unbearable, forcing families to choose between commuting and eating.
In addition to oil prices, fertilizer prices are also at risk. The World Food Program warns that every dollar increase in oil prices brings millions of people closer to hunger.
Home heating and electricity demand will continue to increase crude oil prices.
For Europe, which is currently mired in an energy crisis, winter heating costs may no longer be affordable for millions of people.
For developing countries, where governments often heavily subsidize electricity costs, this can mean severe cuts in other areas of public spending or even power outages.
Air conditioning in the sweltering summers of the Middle East and South Asia may no longer be affordable.
Conditions can create a domino effect that affects everything, everywhere, at the same time.
Manufacturing moves more slowly when energy costs skyrocket. With high energy prices, manufacturing comes to a standstill.
In China, factories already face impossible margins.
Retailers from Lagos to London are raising prices. Airlines add fuel surcharges, making travel prohibitive for ordinary families.
Additionally, transportation services are becoming too expensive and delivery apps are adding fees.
The International Monetary Fund (IMF) issued a stark warning that sustained oil at $200 could shave 1.5 to 2 percentage points off global GDP, enough to push multiple economies into recession.
Although the conflict is between the United States, Israel and Iran, the entire world is paying the price.
