Middle East Conflict Drives Oil Prices Up to 13% Globally

Following the recent Israel-Iran conflict, Brent crude oil prices surged over 10%, reaching $75.18 a barrel, marking a significant market shift and raising concerns about sustained supply disruptions. This spike contrasts with the declining trend in oil prices since mid-2023 and diverges from cryptocurrency trends, with Bitcoin experiencing volatility despite a rally linked to President Trump's pro-crypto policies. The conflict's economic ripple effects are notably impacting India, where higher oil prices threaten inflation moderation, increase freight costs, and risk disrupting vital trade routes such as the Red Sea and Suez Canal, thereby affecting exporters. In North America, analysts suggest the crude price surge may be temporary unless long-term supply constraints emerge, with modest short-term fuel price increases anticipated. The Federal Reserve faces a complex situation as higher oil prices and unresolved trade disputes complicate its inflation and interest rate decisions, amidst political pressure from President Trump to lower rates. Overall, sustained higher oil prices pose a new headwind to a global economy already strained by trade tensions, with JPMorgan warning of potential spikes to $130 a barrel if Middle East tensions escalate further.