As the conflict between Israel and Iran escalates, the ripple effects are being felt across the global economy. Oil supplies are under threat. Israel is already attacking Iranian oil refineries and gas fields. Now Tehran has retaliated. And there’s mounting fears the world could enter into a recession. Some analysts predict there’s now a 30 to 40 percent probability of a recession. Much depends on how things play out now in the Middle East and whether Iran closes the Strait of Hormuz, which would have devastating consequences. This Strait is located between Iran and Oman and is the world’s most important oil transit chokepoint. Roughly 20 per cent of the world’s oil and 25 per cent of liquefied natural gas flows through here. Analysts estimate the price of oil — which is hovering around US$75 a barrel – could surge above US$100 a barrel in the coming weeks. That would send the price of petrol, which is currently at $178.6 cents a litre, as high as $2.20 cents. A big spike in the price of petrol and gas could reignite inflation. Analysts say central banks, including the Reserve Bank could delay interest rate cuts, and may even have to hike them again. Analysts fear a prolonged conflict could plunge the world into a global energy crisis that could last years rather than months. While US President Donald Trump is hoping for a resolution, Iran’s Foreign Minister Abbas Araghchi says they are hitting back at key strategic and economic sites in Israel. Israeli Prime Minister Benjamin Netanyahu says they will continue to take action against Iran.
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