The potential for a wider war in the Middle East is raising fears of a major oil supply shock that could disrupt global markets and push economies toward recession.
Peter S. Goodman reports for The New York Times.
In short:
- Rising tensions between Israel and Iran have sparked concerns about global oil disruptions, potentially causing price spikes and economic instability.
- Iran might retaliate against Israeli strikes by targeting oil facilities or obstructing the Strait of Hormuz, a crucial channel for global oil shipments.
- While the U.S. and other producers could increase output to stabilize prices, poorer nations dependent on oil imports could face severe economic hardship.
Key quote:
“This is an extraordinarily precarious global situation. The world is probably the most unstable that it’s been since the Cold War.”
— Kenneth S. Rogoff, former chief economist at the International Monetary Fund who is now a professor at Harvard University
Why this matters:
A disruption in oil supplies could strain global economies already dealing with other crises like the Russia-Ukraine war. Energy-dependent regions, especially in Europe and lower-income countries, would face heightened risks of inflation and recession.
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