The ongoing US-Iran war is proving to be a global hazard, hampering the age-old oil routes. The prolonged closure of the Strait of Hormuz is now finally showing effect, as oil price spikes have now become violent, with crude oil price trading at $111 at press time. In addition to this, higher oil price fluctuations, above $115 in particular, may trigger inflation fears, new data findings show, indicative of another degrading sign of a spiraling global world order.

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Oil Price Above $115 May Spark Inflation

The prolonged war between the US and Iran is now on the verge of significantly impacting the world economies. With the closure of the Strait of Hormuz, the oil price fluctuations are becoming more violent by the day, fueling fears of inflation rising above the radar. Per the latest post by the Kobeissi Letter, oil prices have earlier touched the $115 mark. If oil prices remain elevated for the next 7 weeks, it may push the CPI inflation markers, triggering it to hit 3.7%. This development may put the US inflation at a higher rate, pushing its economy back to September 2023 levels.

Moreover, since the war, Americans have spent an additional $240M on fuel, with an increased spending of $8.6B due to this ongoing war. The KL post outlines how the extension of this war may trigger an inflation crisis if it’s not put an end to any time soon.

“Oil prices are now crossing above $115/barrel in the US. As a result, our models indicate that if current levels are sustained another ~7 weeks. US CPI inflation will rise to ~3.7%. This would put US inflation at its highest level since September 2023. Amid the surge. Americans have spent an additional $240 million per day on fuel costs since the Iran war began on February 28th. That’s a total of +$8.6 billion in increased spending on fuel over the last 36 days. Our new base case is 3.0% CPI inflation, and it is only rising as the war’s timeline is extended.”

Oil Price Cooling?

Per the latest WG post, the oil prices have slightly calmed a bit, dropping to hit $111 at press time. This particular drop has been noted due to reports of the US and Iran potentially discussing a possible 45-day ceasefire to this ongoing war that they both are embroiled in. This closure, if put into effect, may end the month-long war crisis, giving time for the markets to cool down and recover at their own pace.

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