Iran’s Foreign Minister is warning of an unprecedented global energy shortfall as the militarization of the Strait of Hormuz threatens to unleash an “inflationary tsunami,” while U.S. economists project the escalating war could cost American taxpayers up to $1 trillion.
A Historic Market Shortfall
Iranian Foreign Minister Seyed Abbas Araghchi took to social media on Tuesday, claiming that global markets are facing the “biggest shortfall in HISTORY.”
Citing a potential loss of 20 million barrels of oil per day due to the current Hormuz blockade, Araghchi stated the deficit is “bigger than Arab Oil Embargo, Iran’s Islamic Revolution, and the Kuwait invasion COMBINED.”
“U.S. officials are posting fake news to manipulate markets,” Araghchi wrote on X. “It won’t protect them from inflationary tsunami they’ve imposed on Americans.”
The $1 Trillion Price Tag
Araghchi’s stark warnings coincide with growing alarm among U.S. financial experts. The ongoing U.S. and Israel’s joint military campaign against Iran, dubbed Operation Epic Fury, is already raising fears of a severe economic recoil.
Economist Peter Schiff warned that a prolonged conflict will require massive government borrowing that will hit consumers hard. “The cost will likely be measured in the hundreds of billions and could top $1 trillion, causing already rising inflation to skyrocket,” Schiff stated.
He noted that this inflation will stem primarily from the Federal Reserve creating money to fund the Treasury debt issued to pay for the war.
Latest On Iran-US War: US Bases Targeted In Middle East
In the latest developments, Iran has launched missile attacks on the U.S. bases across five Middle Eastern countries, while a UK maritime agency reported that a cargo ship in the Strait of Hormuz caught fire and was evacuated after being struck by an unknown projectile.
Additionally, Israeli Prime Minister Benjamin Netanyahu spoke directly to the “people of Iran”, calling on them to “remove the Ayatollah regime and gain your freedom,” in an X post.
This continues even as President Donald Trump hinted that the U.S. campaign against Iran could be nearing its endpoint on Monday, saying Tehran’s military capacity has been heavily degraded. Trump warned Iran against placing naval mines in the Strait of Hormuz, threatening severe military consequences if such activity were confirmed.
Global Supply Chains Buckle
The physical realities of the conflict are already rattling international markets. Crude oil prices surged over 30% last week, briefly breaching $120 a barrel. At the last check, WTI Crude Oil futures were 0.85% higher at $84.16, retreating from an earlier 52-week high of $119.48.
The United States Oil Fund LP (NYSE:USO), tracking the WTI futures, closed 1.47% higher on Tuesday, and it has risen by 17.36% over the last five sessions.
This energy shock is rapidly bleeding into other sectors, severely disrupting agricultural supply chains and driving up fertilizer costs after an Iranian drone attack forced the shutdown of Qatar’s Ras Laffan, the world’s largest natural gas export facility.
Consequently, European natural gas prices climbed to a three-year high, jumping 68% in just one week. Economist Mohamed El-Erian cautioned that global production systems are highly vulnerable right now, warning that cross-border supply chains “do not handle ‘sudden stops’ well.”
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
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