Tensions in the Middle East continue to affect global oil markets, with Brent crude prices jumping 8% to $75 per barrel following fears of supply disruptions.
The region, a key hub for oil production and maritime trade, has seen increased threats to shipping routes due to conflict.
Houthi rebels, supported by Iran, have attacked vessels in the Red Sea, forcing many ships to reroute around Africa—adding up to two weeks and $1 million in costs per journey, according to Sarah Schiffling of the Hanken School of Economics.
Longer voyages reduce shipping capacity, impacting global supply chains. Iran has also repeatedly threatened to block the Strait of Hormuz, a critical channel for a quarter of the world’s oil trade. Goldman Sachs warns that such a move could push oil prices past $100 a barrel.
The IMF notes that a 10% oil price hike typically adds 0.4 percentage points to inflation in advanced economies.