War in Middle East Sends Global Economy into Tailspin

The US Federal Reserve Board has raised its policy rate for the first time in three years, citing economic strength and high inflation as reasons. However, experts argue that the war in the Middle East is a major contributing factor to the current economic situation. The conflict has driven up oil prices from around $US70 a barrel to over $US100 a barrel, with gasoline and diesel prices reaching record levels in many countries.

The International Energy Agency reports that global crude oil supplies are still below pre-war levels, despite some production increases outside the region. Refined product supplies, such as petrol and diesel, are also severely impacted due to damaged refining infrastructure in the Middle East.

Fed chair Kevin Warsh carefully avoided mentioning the war in the Middle East during his explanation for the rate hike. However, experts point out that other developed economies with less growth and lower AI investment are also struggling with high inflation and raising their policy rates.