The conflict between the US, Israel, and Iran is escalating into a new global energy crisis as the world deals with the largest oil supply shock in history.
Crude prices skyrocketed to $115 per barrel following the removal of 20% of total global oil output which is roughly 20 million barrels per day.
The major oil-producing countries like the UAE and Kuwait have reduced production due to the blockade in the Strait of Hormuz. This crisis is worsening after strikes hit the Iranian oil facilities.
Richard Yetsenga, the chief economist of the ANZ Group, stated that, "about 20 per cent of global crude runs through that sea area. That's going to keep oil prices under upward pressure."
The International Monetary Fund (IMF) noted that shipping traffic has reduced by 90%. Managing Director Kristalina Georgieva said, "Important oil and gas facilities have suffered damage and stoppage. For much of Asia and the world, energy security has shot up the list of concerns."
G7 countries are planning to release emergency reserves to stabilise the economy. Experts like Daniel Hynes note the situation now "exceeds even the worst-case scenario we envisage."
