The prolonged disruption to global energy supplies surged oil prices to $114 per barrel due to the US and Israel’s war on Iran.
Oil prices surged above $100 per barrel during Russia’s war on Ukraine in 2022.
Although US President Donald Trump stated that short-term oil prices will drop rapidly once the destruction of the Iranian nuclear threat is over.
US Secretary of Energy Chris Wright also stated that the increasing oil prices would be temporary. Since February 28, when the US and Israel launched joint strikes on Iran, crude oil prices have surged by about 50 percent.
The halt of the Strait of Hormuz by Iran, as retaliation, has impacted about one-fifth of the global oil supply.
The closure of the waterway by Iran has forced Iraq, the UAE, and Kuwait to cut production amid an accumulating backlog of barrels with nowhere to go.
Israel on Saturday carried out airstrikes targeting four Iranian oil infrastructures for the first time since the start of the war.
Iran’s IRGC, in response, threatened that it will target energy facilities across the region in retaliation, which could push oil prices to $200 per barrel.
Officials of the Trump administration stated that the war will be over within weeks, but the disruption in energy supplies has stoked fears of higher inflation and slower economic growth.
According to the International Monetary Fund, every sustained 10 percent rise in oil prices results in a 0.4 percent increase in inflation. This also results in a 0.15 percent reduction in global economic growth.
