The global economy is rapidly heading for crisis (Image: Getty)
The global economy has been issued a 10-day warning as Iran's and US's chokehold on the Strait of Hormuz could bring global trade close to a halt.
Robert Pape, a professor at the University of Chicago, said he believes the economic consequences of the war are about to expand far beyond the price of oil—and he says the effects will be felt in days, Business Insider reported.
"Within 10 days, parts of the global economy will start running short of critical good. Not just higher prices - Shortages. Markets are not ready for this," he said.
Quoted by Business insider, he said: "Once inventories run down, this stops being about expensive inputs. It becomes about missing inputs. Factories don't slow because costs rise. They stop because materials don't arrive."
Kharg Island is another vital Iranian oil terminal. (Image: Getty)
He also added that America's energy independence "won't spare the US economy from more pain to come, echoing other commentators who have said recently that the US isn't isolated from the disruptions", the same outlet reported.
Business Insider also spoke to Michael Cembalest of JPMorgan Private Bank who also said that the US's energy independence "won't shield the US from energy shocks," the Insider wrote.
Cembalest, quoted by the same publication, said: "When supply chains seize, the shock transmits via trade reductions," Pape added. "This is the real shift: prices no longer determine outcomes. Access does. By the time shortages show up in headlines, it's already too late. That's how these shocks work."
The major consequence of the war so far has been the one linked to oil prices, which have soared in early market trading after the US announced it will block Iranian ports.
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The US military said it will block all maritime traffic entering and exiting Iranian ports. After this announcement, the price of US crude oil rose eight percent to $104.24 a barrel in early trading, and Brent crude oil, the international standard, rose 7 percent to $102.29.
Brent crude has swung dramatically during the Iran war, rising from roughly $70 per barrel before the war in late February to more than $119 at times. On Friday, ahead of the peace talks, Brent for June delivery fell 0.8% to $95.20 per barrel.
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