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According to a report by Bloomberg economists, including Ziad Daoud, as the deadline for President Trump's suspension of so-called reciprocal tariffs approaches, geopolitical risks are rising, intertwining with the potential escalation of tariffs in the coming weeks. The prolonged Middle East conflict's greatest impact on the economy may be a surge in oil prices. In extreme cases of the Strait of Hormuz being closed, crude oil could spike to over $130 per barrel. This could bring the US summer CPI close to 4%, prompting The Federal Reserve and other Central Banks to delay future interest rate cuts.
The report states that any significant rise in oil or natural gas prices, or trade turmoil caused by further escalation of the conflict, will become yet another drag on the world economy.