USAF aircraft fly over burning Kuwaiti oil wells (1991)
The Economic Collapse Blog: If You Think The Price Of Oil Is Skyrocketing Now, Just Wait Until The War Starts…
In the aftermath of the most dramatic attack on Saudi oil facilities that we have ever seen, the price of oil has exploded higher. The Wall Street Journal is calling this attack “the Big One”, and President Trump appears to be indicating that some sort of military retaliation is coming. Needless to say, a direct military strike on Iran could spark a major war in the Middle East, and that would be absolutely devastating for the entire global economy. Just about everything that we buy has to be moved, and moving stuff takes energy. When the price of oil gets really high, that tends to create inflation because the price of oil is a factor in virtually everything that we buy. In addition, a really high price for oil also tends to slow down economic activity, and this is something that we witnessed just prior to the financial crisis of 2008. And if this crisis in the Middle East stretches over an extended period of time, it could ultimately result in a phenomenon known as “stagflation” where we have rapidly rising prices and weaker economic activity simultaneously. The last time we experienced such a thing was in the 1970s, and nobody really remembers the U.S. economy of the 1970s favorably.
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WNU Editor: Almost 20% of the world's oil supply flows out of the Persian Gulf. A war would shut this traffic down, and needless to say the global economic impact will be massive.
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