7 Ways the Iran Conflict Will Drain Your Wallet

If you think that a war in the middle of the world does not affect your wallet, you are not paying attention. I’ve been watching the markets for a long time, and I can tell you this: Geopolitical turmoil always creeps into your checking account.

We’re seeing the dramatic effects of the Iran conflict affecting everything from your morning coffee to your mortgage rate. When a critical chokepoint like the Strait of Hormuz – which handles an estimated 20 million barrels of oil per day, or about 20% of global fuel consumption – is cut off, the whole world pays the price.

Here are seven ways this problem is draining your bank account and what you need to know to protect yourself.

1. Your grocery bill is growing

It is not only oil that flows through the Gulf. The world’s largest supply of fertilizers passes through the Strait of Hormuz. Because of the disruption, Australian farmers are growing less wheat, and Indian restaurants are taking the staple off their menus because cooking gas is suddenly a luxury.

If farmers pay more to grow food, you pay more to eat it. That’s why creating an inflation-proof grocery budget is no longer an option.

2. Your dream home is out of reach

Buying a house is more expensive today than it was a few months ago. Why? Oil prices fuel fears of high inflation.

When inflation threatens to rise, mortgage rates rise. It is a reaction that drives consumer prices out of the market.

3. The clothes on your back cost more

Do you think this is about the gas in your car? The polyester in your sportswear is made from petrochemicals. As oil prices rise, the cost of producing clothes rises along with them.

Also, canceled cargo flights mean fabrics are piling up in aisles and supplies are being choked.

4. Your vacation is set

Airlines are bleeding money from rising jet fuel costs, and they’re not getting a hit. They transfer to you.

Add in the fact that tens of thousands of flights have been canceled or rerouted due to the closure of airports in the Middle East, and you’re looking at skyrocketing airfares.

5. Health care supplies stop

This is where supply chain breaks become dangerous. Cargo hub closures at major transit hubs such as Dubai and Doha mean essential medicines – including cancer drugs that require deep refrigeration – may not reach patients in time.

6. The power lines are back

You don’t have to live near a collision to feel the shock of the force. Drivers in places like San Antonio, Texas, are already lining up at gas stations just to fill up their tanks. They expect price increases on tap, and honestly, they are not wrong to prepare.

7. Even your sugar is not safe

Brazil is the largest producer of sugar in the world. With global energy prices this high, Brazilian sugar mills are changing their operations to produce more biofuel instead of refined sugar to make money.

Less sugar on the world market means higher prices at your local bakery and grocery store.

How to handle compression

Here’s the bottom line: You can’t control the geopolitical climate, but you can control your money. Check how you are currently spending money.

It’s time to be ruthless with your budget. Cut the fat, delay luxury purchases, and find out how to buy in bulk and save money to brace yourself until the supply chain dust settles. Panic doesn’t help, but preparation does.