How $200 oil will hit your wallet: Gas, food, household prices explained
Iranian authorities have issued a stark warning that oil prices could skyrocket to $200 per barrel as the Islamic Republic escalates its military campaign in the strategic Strait of Hormuz, vowing to halt all petroleum shipments to the U.S. and its allies.
The warning follows as at least three vessels were struck by projectiles in the vital chokehold on Wednesday, March 11.
The price rise to $200 per barrel has impacts beyond geopolitical sabre-rattling, directly affecting household budgets globally.
The most immediate impact hits drivers worldwide.
It is expected that the gas prices could surge in the United States past $6 per gallon. Europeans, already paying $6 to $8 per gallon with taxes, can see prices reaching $10 or more.
In developing nations of the region, the 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 Programme warns that every dollar increase in oil prices pushes millions closer to hunger.
Heating homes and electricity demand will follow crude prices upwards.
For Europe, which is currently in the grip of an energy crisis, heating costs in winter may no longer be affordable for millions of people.
For developing countries, where governments often heavily subsidize electricity costs, it may mean severe cuts in other areas of public expenditure or even power outages.
Air conditioning in sweltering summers in the Middle East and South Asia may no longer be affordable.
The conditions can create a ripple effect affecting everything, everywhere, all at once.
Manufacturing grinds slower when energy costs soar. With high energy prices, manufacturing grinds to a halt.
In China, factories are already facing impossible margins.
Retailers from Lagos to London raise prices. Airlines tack on 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) issued a stark warning that sustained $200 oil could shave 1.5 to 2% points off global GDP, which is enough to tip multiple economies into recession.
Although the conflict lies between the U.S., Israel, and Iran, the whole world is paying the price.
