As tensions between Israel and Iran intensify, now with the US involved, experts say the impact could soon be felt far beyond, hitting your wallet in the form of rising fuel, food, and living costs.
Oil prices are already climbing, and economists warn there’s more to come.
Why Oil Prices Are Rising
The Middle East is home to some of the world’s biggest oil producers, and any conflict in the region quickly rattles global markets. Following the US bombing of Iranian nuclear sites, oil prices jumped 3 per cent, and further escalation could push prices well past $100 per barrel, according to experts.
If the Strait of Hormuz shuts down, the supply will be disrupted, and oil prices could spike.
About 20 per cent of the world’s oil supply passes through the Strait of Hormuz, and if it closes, it will send shockwaves across energy markets and supply chains.
What This Means for Everyday People
Higher oil prices affect much more than just what you pay at the pump. Here’s how:
- Fuel and energy costs: Expect higher prices for petrol, electricity, and cooking gas.
- Food and goods: Rising transport and production costs lead to more expensive groceries, clothing, and everyday items.
- Government budgets: Countries that subsidise fuel, like Indonesia and India, could face serious pressure on public spending.
Who’s Most at Risk?
Countries in Asia and some European nations are vulnerable because they rely heavily on oil imports from the Middle East. India, for example, imports around 85 per cent of its crude oil, while Indonesia brings in about 60 per cent. Countries like Thailand and the Philippines also depend on Gulf oil.
If oil prices increase by $10–20 per barrel and stay high:
- India’s oil import bill could grow by $30–40 billion annually
- Indonesia could face cuts to welfare and infrastructure spending
- Some governments may have to choose between fighting inflation or keeping currencies stable
Are There Any Alternatives?
Not really, not in the short term. Oil reserves might provide a short-term buffer, but they won’t last long.
Without substitutes, prices will need to rise to reduce demand, meaning households and businesses will feel the pinch.
The growing conflict in the Middle East could soon mean:
- Higher fuel and electricity bills
- More expensive groceries and goods
- Pressure on government subsidies and spending
