Anyone with a price book will agree that the cost of nearly everything has been steadily going up. Unfortunately, wages are not increasing at the same rate. And to quote Bachman-Turner Overdrive, you ain't seen nothin' yet. There are three events happening in the economy right now that could, alone, cause the prices of everything from food to the materials to make replacement parts for your vehicle to skyrocket. But if you combine them all together? We could be facing a perfect storm of economic havoc.
Iran is blocking oil exports from Saudi Arabia
Yesterday, Saudi Arabia announced that they were halting oil exports through a specific lane in the Red Sea due to attacks by "Yemen's Iran-aligned rebels." Reuters reported:
Saudi Arabia and arch-foe Iran have been locked in a three-year proxy war in Yemen, which lies on one side of the Bab al-Mandeb strait at the southern mouth of the sea, one of the most important trade routes for oil tankers heading from the Middle East to Europe.
The Houthis, who have previously threatened to block the strait, said on Thursday that they had the naval capability to hit Saudi ports and other Red Sea targets. Iran has threatened to block another strategic shipping route, the Strait of Hormuz.
Saudi Energy Minister Khalid al-Falih said the Houthis attacked two Saudi oil tankers in the Red Sea on Wednesday, one of which sustained minimal damage.
"Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe," he said. (source)
According to the US Energy Information website, the United States imports 904,000 barrels of oil per day from Saudi Arabia. Prices of fuel would almost certainly go up, which, of course, affects the price of everything that is transported, which is, of course, everything.
Should we suddenly see a shortfall of nearly a million barrels per day, we'd have to get that oil from somewhere else. Most of the other oil we do not produce ourselves comes from Canada, from whom we currently import 120.000-140,000 barrels of oil per day.
Which leads us right to the next financial catastrophe that is looming.
The trade war is getting more heated every day.