The escalation of the conflict in the Middle East and the closure of the Strait of Hormuz have caused a strong earthquake in international financial markets. The main European stock markets have opened with falls of more than 3% after the increase in tension in the region and that is not to mention oil, taking into account that Hormuz is a bottleneck through which 20% of the oil and liquefied natural gas (LNG) consumed worldwide circulates. A full-fledged energy disaster announced.
This has had direct consequences, therefore, on the price of crude oil. North Sea Brent for delivery in May exceeded $81 a barrel, while US crude oil rose more than 7% in the session, reviving inflationary fears globally.
In this context, the economist and journalist Pilar García de la Granja analyzed the situation in the program ‘Herrera at COPE’where he issued a direct warning about the economic consequences.
“It was to be expected and it actually happened”
“It was to be expected and it has actually happened. Carlos, oil prices rise and the oil companies raise the price of gas and the gas companies. And what is falling? Well, everything else,” the economist begins her statements.
The expert thus described the immediate reaction of the markets to a conflict that affects the “world heart of oil.” The closure of the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas passes, has intensified uncertainty.
“It will be much more expensive to go on vacation by plane”
“What can we expect from now on? Well, look, if the conflict continues, Carlos, the experts say that we are going to see how inflation rises, how prices rise. Everything, because unlike Ukraine, we are talking about the world’s oil heartland and that means that it will have an impact on practically everything.”
The economist detailed the direct effect on citizens’ pockets: “What is it all about? Look, oil in gasoline, fuel, kerosene for airplanes, it is going to be much more expensive to go on vacation by plane and in thousands of products that are manufactured with petroleum derivatives, plastic, without going any further, fabrics, some drugs.”
In addition, he warned of the energy impact: “Anyway, gas also rises and of course, this directly influences the price of the electricity bill in a country that has skyrocketing labor costs like Spain, productivity in free fall like Spain, homeless absenteeism from work and taxes at the confiscatory limit.”
“If energy costs rise further, we will see how everything from the shopping basket to the electricity bill or going to work by car will cost us much more,” concludes De la Granja. To all this we must add housing, which will also be affected by the conflict in the Middle East with more expensive mortgages and a slowdown in sales.
With the conflict open and the energy supply under pressure, the risk of a new inflationary escalation is once again at the center of the international economic scene.