Iran Conflict Pushes Oil Prices to Record High, Triggering Chain Reactions Threatening Daily Life
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Global oil prices have surged to their highest point since the outbreak of the Ukraine war in 2022. Concerns have increased worldwide after the US military presented President Donald Trump with new potential actions against Iran.
According to Axios News, the US Central Command has devised plans for a short and powerful strike to break through the impasse in talks with Tehran. The BBC has sought comments from Central Command and the White House on this matter.
Experts warn that the potential impact would not be limited to oil prices alone but could ripple across the global economy. Rising oil costs have far-reaching effects on the worldwide economic system.
Nabin Das, senior oil analyst at data and analytics platform Kepler, explains that the increase in oil prices “directly affects other sectors, fuels higher inflation, and impacts nearly all aspects of our daily lives.”
“Likely, we will soon see top headlines about efforts to de-escalate tensions,” he added.
1. High Oil Prices
This is the starting point. Crude oil prices rise due to supply concerns, geopolitical conflicts, or market speculation.
On Thursday this week, the price of Brent crude oil surged nearly 7% to $126 per barrel but settled at around $116 during European trading. Continuous fuel price hikes this week reflect the breakdown of peace talks between Iran and the US. Simultaneously, the Strait of Hormuz is nearly blocked.
Before the US-Israel conflict against Iran began, Brent crude oil was priced at about $70 per barrel — approximately 80% lower than Thursday’s peak.
Crude oil is the primary raw material for petrol and diesel production. When wholesale prices rise, this increase directly impacts prices at petrol stations.
2. Impact on Other Oil-Related Products
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Oil is not only fuel; it is crucial for producing aviation fuel, plastics, packaging, chemicals, and fertilizers. An increase in crude oil prices pushes up production costs across these sectors.
The conflict may also drive up costs of energy, food products, and airfares.
Some airlines have already raised airfares, and chemical fertilizer prices are rising, which could increase food prices.
Suzanna Streeter, chief investment strategist at consultancy Wealth Club, warns that price increases may continue into next year.
“The shipment of urea fertilizer is stalled, raising costs for farmers worldwide,” she mentioned.
“These price hikes spread through the supply chain, and concerns are growing about rising prices for nearly all everyday goods from late this year into next year.”
3. Transportation Could Become More Expensive
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Transportation is key for distributing food, consumer goods, and raw materials. Rising fuel prices can drive up final product costs.
As shipping costs increase, businesses often pass these expenses to consumers, resulting in higher retail prices.
4. Overall Inflation Increase
Such price increases accumulate in the global economy. Higher energy costs raise operating expenses—from factory production and temperature control to transportation.
Food prices rise since agriculture, packaging, and distribution depend heavily on oil and chemical fertilizer prices. The production and shipping of clothing and electrical goods also become more expensive.
Sudden price hikes across various sectors may lead to persistent inflation—continuous increases in the cost of living.
“The entire world will feel the impact, with some countries more affected than others,” says Brazilian economist Andre Perfeto.
He notes that recent inflation rates have exceeded central banks’ targets.
By mid-2025, Brazil’s annual inflation reached 5%, but it dropped to 4.3-4.4% at the start of 2026, whereas the target was only 3%. Due to the Middle East conflict, the central bank forecasts inflation climbing to 4.86% by the end of this year.
Many other countries are experiencing similar situations.
5. Impact on Daily Life
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Ultimately, such price increases have multifaceted effects on households: groceries, transportation, water, and electricity bills all rise.
As living costs increase, workers may demand higher wages, putting further pressure on inflation. Central banks might then raise interest rates to curb inflation, making loans more expensive and reducing spending and investment.
Countries like Pakistan and Bangladesh have already closed schools to save fuel and cut costs.
“All these measures risk weakening economies and triggering a global recession,” warns Perfeto.
“Immediate resolution of these issues seems unlikely. I don’t expect Trump to resolve this quickly,” he added.
The International Monetary Fund (IMF) has warned in its latest World Economic Outlook that the Iran conflict poses a major risk to the global economy, with prolonged conflict increasing the danger of a worldwide recession.
The IMF advises central banks to be cautious in raising interest rates to avoid worsening inflation.
US Treasury Secretary Scott Baesent told the BBC, “If Iran reduces the risk of developing nuclear weapons, we may endure some economic difficulties for a few weeks.”
“I have little hope for a swift solution to this problem,” he added.