By “US Federal Reserve officials warned that the ongoing U.S.-backed conflict with Iran could disrupt global oil supply chains, which may further drive inflation higher. Since energy is the backbone of any economy, any major disruption in oil supply can severely affect transportation, manufacturing, and overall economic activity, ultimately increasing prices across the economy.
Austan Goolsbee, President of the Chicago Fed, said that business executives told him shortly after the conflict began on February 28 that a short-term rise in oil prices would not be a major problem. However, if oil prices remain high for months, it could place intense pressure on global supply chains — similar to what helped fuel the inflation surge during the COVID-19 pandemic.
If the conflict continues, supply chain disruptions could worsen and push inflation even higher. As a result, ordinary people may have to pay more for the same goods and services that previously cost less.”
(Source-Reuters)