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→Impact of the Iran war and closure of Hormuz Strait
By late 2025 the [[inflation]]ary pressure already began. Consumer price inflation reached 6.8% in 2024, the highest level since the early 1980s. Food prices increased 9.3%. Energy prices rose 12.7%. Housing costs climbed 8.4%. These increases occurred while the [[Federal Reserve]] was actively trying to control inflation through [[interest rate]] increases.
By late 2025 the [[inflation]]ary pressure already began. Consumer price inflation reached 6.8% in 2024, the highest level since the early 1980s. Food prices increased 9.3%. Energy prices rose 12.7%. Housing costs climbed 8.4%. These increases occurred while the [[Federal Reserve]] was actively trying to control inflation through [[interest rate]] increases.
===Impact of the [[Iran war]] and closure of [[Hormuz Strait]]===
===Impact of the 2026 [[Iran war]] and closure of [[Hormuz Strait]]===
The petrodollar system became essentially a protection racket for the large oil-producing countries in the [[Middle East]] aligned with the [[US]], such as [[Saudi Arabia]], [[Kuwait]], the [[United Arab Emirates]] (UAE), [[Bahrain]], and [[Qatar]]. The US [[military]] supposedly granted "[[security guarantee]]s" to these countries in exchange for their agreement to denominate oil sales in [[US dollar]]s and recycle the dollars into the [[US Treasury]] [[market]] to finance the US [[federal government]] [[budget deficit]], thereby creating [[demand]] for the US dollar outside the [[United States]] and helping keep [[interest rate]]s lower than they otherwise would be.
The petrodollar system became essentially a protection racket for the large oil-producing countries in the [[Middle East]] aligned with the [[US]], such as [[Saudi Arabia]], [[Kuwait]], the [[United Arab Emirates]] (UAE), [[Bahrain]], and [[Qatar]]. The US [[military]] supposedly granted "[[security guarantee]]s" to these countries in exchange for their agreement to denominate oil sales in [[US dollar]]s and recycle the dollars into the [[US Treasury]] [[market]] to finance the US [[federal government]] [[budget deficit]], thereby creating [[demand]] for the US dollar outside the [[United States]] and helping keep [[interest rate]]s lower than they otherwise would be.