Iranian authorities have issued a stark warning that oil prices could skyrocket to $200 a barrel as the Islamic Republic steps up its military campaign in the strategic Strait of Hormuz, pledging to suspend all oil shipments to the United States and its allies.
The warning follows at least three ships being hit by projectiles in the vital hold on Wednesday March 11.
The price rise to $200 per barrel has consequences that go beyond geopolitical saber rattling, directly affecting household budgets around the world.
The most immediate impact is on drivers around the world.
Gas prices in the United States are expected to exceed $6 per gallon. Europeans, who already pay $6 to $8 a gallon with taxes, may see prices reach $10 or more.
In developing countries across the region, fuel costs could become unbearable, forcing families to choose between traveling and eating.
Besides oil prices, fertilizer prices are also under threat. The World Food Program warns that every dollar of oil price increases puts millions of people closer to hunger.
Home heating and electricity demand will follow the rise in crude prices.
For Europe, currently in the grip of 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 blackouts.
Air conditioning during the sweltering summers of the Middle East and South Asia may no longer be affordable.
Conditions can create a ripple effect affecting everything, everywhere, all at once.
Manufacturing slows when energy costs skyrocket. With high energy prices, manufacturing is grinding to a halt.
In China, factories are already facing impossible margins.
Retailers from Lagos to London are raising prices. Airlines impose fuel surcharges, making travel prohibitive for ordinary families.
Additionally, ride-hailing services are becoming too expensive and delivery apps are adding fees.
The International Monetary Fund (IMF) has issued a stark warning that $200 oil could reduce global GDP by 1.5 to 2 percentage points, enough to tip several economies into recession.
Although the conflict is between the United States, Israel and Iran, the entire world is paying the price.
