The U.S.-led military operation against Iran — described by Secretary of State Marco Rubio as expected to conclude in “weeks not months” — is producing consequences that are anything but short-term for the global economy. At a meeting of G7 foreign ministers, Rubio also floated the alarming prospect of Iran establishing a toll system for the Strait of Hormuz, the narrow chokepoint through which roughly a fifth of the world’s oil passes daily.
The most immediate and measurable impact is the surge in diesel prices. As The New York Times reported, skyrocketing diesel costs are cascading through supply chains in ways that touch virtually every consumer good. Maui Brewing, a brewery in Kihei, Hawaii, that imports its raw materials by ship, is just one business feeling the squeeze — a microcosm of an economy in which diesel powers the trucks, ships, and trains that move nearly everything we buy.
The effects are decidedly global. In India, one of the world’s largest crude oil importers — relying on foreign suppliers for more than 85 percent of its oil needs — Finance Minister Nirmala Sitharaman announced tax cuts on diesel and petrol to “provide protection to consumers from rise in prices.” Russia, India’s biggest oil supplier, is itself entangled in the geopolitical disruption, adding another layer of uncertainty.
