The Iran war brings the oil shock to the global inflation front

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The Iran war has contributed to increasing inflationary pressures on global commodity prices, and this is not surprising, as inflation rates often rise during wars, especially in countries directly affected by battles, as a result of the disruption of production and shipping, in addition to the atmosphere of uncertainty that provides opportunities for speculation and making quick profits.

The stated goal of the war launched by Israel and the United States against Iran was to eliminate the Iranian political system and reduce its influence in the Middle East, along with limiting its nuclear capabilities.

On the other hand, Tehran used a strategic card that it seemed to have been preparing for a long time ago, as suggested by the military preparations that appeared during the war. This paper was aimed at targeting navigation traffic through vital sea lanes for transporting oil, most notably the Straits of Hormuz and Bab al-Mandab, which led to disruption of shipping traffic and raised anxiety in global markets, pushing the price of Brent crude to $120 per barrel. Prominent officials in the oil industry also warned of the possibility of prices rising to $200 per barrel if the closure of the straits continued for a period exceeding a few days, contrary to what happened during this round of the war.

Likewise, the scope of the war has expanded to include the countries of the Gulf Cooperation Council, in a development that suggests that the nature of the weapons used and the information available about the targeted sites were prepared for it in advance. The Iranian attacks targeted Gulf facilities and sites, raising concerns about their repercussions and repercussions.

However, these attacks did not diminish the position that the GCC countries occupy in the global oil industry, as their production capabilities in oil and gas, in addition to the international confidence they have accumulated and investments in modern facilities, still make them an essential element in the security of global energy supplies.

There is no doubt that the closure of the Strait of Hormuz or the disruption of navigation in it left a clear impact on the course of the war and the oil markets. Major companies had begun constructing large reservoirs some time ago to create oil reserves that would ensure the availability of sufficient quantities in times of crisis. The current war experience has prompted some of these companies to take additional steps, by establishing new storage facilities or expanding existing ones, to store larger quantities of oil outside their countries, near consumption centers, and away from local and regional pipelines. This approach aims to enhance the flexibility of distributing supplies and preparing for future disturbances, including the possibility of repeated attempts to disrupt navigation or disrupt the Gulf oil industry.

In the United States, inflation rose to 4.2 percent as of last September, its highest level in three years, in light of the rise in oil and energy prices during the war. The US Energy Information Administration warns that energy prices will continue to rise through 2027.

For its part, the Federal Reserve Bank of Dallas expects that future oil supply disruptions will lead to an increase of between 0.18 and 0.49 percentage points in commodity prices within the supply chain. Other estimates indicate that the rise in fuel prices was reflected in transportation and production costs, while the rise in aviation fuel prices contributed to an increase in air travel costs by about 25.5 percent.

According to the New York Times, the rise in fuel prices quickly affected American consumers, with the increase in the cost of filling cars with fuel, which added new burdens on family budgets, at a time when the effects of rising energy are expanding to include the costs of living, transportation, and production.

In Europe, data from the International Energy Agency indicate that rising energy prices contributed to increasing inflationary pressures. Spain recorded an increase in the inflation rate to 5 percent during September, an indication that the impact of energy market turmoil is being transmitted to the prices of goods and services.

Quoted from Asharq Al-Awsat