at the center of international economic concerns. The rise of the barrel above 100 dollars, driven by the military escalation between the United States, Israel and Iran, has reactivated fear of a new energy shock with consequences for global growth, inflation and financial markets.
Although conflicts in the Middle East have caused similar crises in the past, analysts They warn that the current situation combines several risk factors: geopolitical tensions, world trade that is still fragile and economies that still carry the inflationary impact of recent years.
In that context, Governments, central banks and companies observe, aware that a new cycle of rising prices could slow down the global economic recovery.
Oil once again exceeds the $100 barrier
The price of crude oil has climbed to exceed $119 per barrelits highest level since the start of the Russian invasion of Ukraine in 2022. The main reason is the risk to supply in the Strait of Hormuz, one of the most sensitive points in global energy trade.
Through that sea route—located between Iran and Oman— Approximately a fifth of the oil transported transits by sea throughout the planet. If this step were blocked for a prolonged period, the impact on the energy market would be immediate.
Many analysts consider that, in the worst scenario, The price of oil could rise to $150 per barreleven surpassing the historical record registered in 2008. Among the factors that will determine how far the increase will go, the following stand out:
- The duration of the conflict in the region
- The possible prolonged interruption of traffic in the Strait of Hormuz
- The ability of producing countries to divert their exports
- The response of large producers such as Saudi Arabia or the United States
Some exporters have already started looking for alternative routes, but the available infrastructure is limited. This causes logistical bottlenecks. that reduce the real supply capacity to the market.
A new risk for global inflation
The rise in energy costs It comes at a particularly delicate time. After several years of price increases caused by the pandemic and the war in Ukraine, central banks were beginning to consider interest rate cuts.
A new rise in oil could completely change that scenario. When the price of crude oil rises, Its effect spreads quickly to the entire economy:
- fuel becomes more expensive
- Energy bills for homes and businesses increase
- Transportation and production costs rise
- supply chains become more expensive
All of this ends up being transferred to the final prices that consumers pay. However, some economists believe the impact could be less than in previous energy crises. Today, developed economies consume less energy per unit of production and labor markets are less likely to generate wage spirals and prices like those experienced in the seventies.
Could it trigger a global recession?
The great fear is that rising energy prices will coincide with an already weakened world economy. Many households still carry the loss of purchasing power accumulated in recent yearswhile companies and governments face high levels of debt.
In this scenario, a new price increase could lead to a particularly harmful combination: weak growth and persistent inflation, what economists call stagflation.
Energy crises have preceded several recessions in recent decades. The rise in oil prices after conflicts in the Middle East was behind the economic crises of:
- 1973, after the Arab oil embargo
- 1979, during the Iranian revolution
- 1990, after Iraq’s invasion of Kuwait
More recently, the energy shock caused by the war in Ukraine severely slowed European growth in 2023. If the current conflict is prolonged, the impact could be felt especially in dependent regions of energy imports, like Europe.
What governments can do
Faced with the risk of shortages, industrialized countries are studying using strategic oil reserves to stabilize the market. The United States and China have large storages that could be used in an emergency. Europe, on the other hand, is especially vulnerable due to its external energy dependence.
In addition to intervening in the market, Governments could be forced to approve new aid to alleviate the impact of energy bills in homes and companies, as already happened during the energy crisis of 2022.
The problem is that the fiscal margin is much smaller than then. After years of high spending and growing debt, many countries have less capacity to finance large support programs without further straining the financial markets.
In short, the future of the global economy will depend largely on the evolution of the conflict in the Middle East. If the crisis is resolved quickly, the impact could be limited. But if oil remains above $100 or $120 for months, the world could face one of the biggest energy shocks in recent decades.
