The current U.S-Israel and Iran conflict has had a wide range of implications. More specifically, this geopolitical conflict has significantly affected the U.S. market. How so? The conflict has created a risk to oil shipping, leading to oil supply distribution and a dramatic increase in oil prices. BBC News stated that "In the US, the S&P 500 fell sharply at the open but recovered some of those losses, ending down 0.9%."
BBC states that "the spike in gas prices came after QatarEnergy, one of the world's biggest exporters, halted production following "military attacks" on its facilities."
Importantly, "Shipping through the Strait of Hormuz is crucial to the global economy, with about 20% of the world's oil and gas passing through the waterway. But traffic has come to a halt after several vessels were attacked in recent days."
What do higher oil prices mean for consumers like me and you? It means there will soon likely be higher gas prices.
In addition to the conflict in the Middle East affecting the U.S. market, it has impacted countries worldwide. For instance, "UK gas prices have now doubled since the US and Israel began a wave of air strikes on Iran on Saturday." Evidently, the U.S. isn't the only country that relies on overseas transportation to receive much of its oil.
On the other hand, TheConversation writes that "oil may no longer dominate the global economy as it did in the 1970s." This is true for many reasons. For one, energy sources are more diverse today; they include fossil fuels, renewable energy, nuclear energy and more. There is also greater energy efficiency in the modern day; this is driven by several factors- including technological advancements, smart infrastructure, and energy security.
Despite the fact that oil might not dominate the economy as it did in previous years, oil will continue to feed "directly into petrol prices, diesel, aviation fuel and shipping, and shapes the cost of transporting and producing everything from food to manufactured goods. When oil prices rise quickly, the effects spread beyond energy markets," states TheConversation. Thus, this conflict in the Middle East will continue to disrupt markets, economies, and have various indirect consequences- many of which we haven't predicted yet.
