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by Shirzad Azad

Oil prices have surpassed a record US$96 a barrel. Given the growing geopolitical tensions in the Middle East involving an imminent war between the Turks and the Kurds over the future of oil-rich Kirkuk and the prospect of an independent Kurdish state, and the current standoff about Iran's nuclear program, petroleum prices may cross over $100 a barrel in coming months.

Despite the indispensible role of the West, and the United States in particular, in creating and escalating diverse tensions in the Middle East and among the oil suppliers of the Persian Gulf region, ironically it is the West itself that will be forced to suffer from the fuel price hike and the following consequences of a high-priced energy on the world economy.

Oil functions as the lifeblood of the global economy and any increase in petroleum prices has serious effects and, in some cases, devastating pains on big economies in both developed and developing countries. Cheap oil has long been an important engine of rapid economic growth and development in the West and the East.

For instance, it was more than one and half decades ago when American economist Alan Freeman pointed out that each $1 fall in the price of a barrel of petroleum transfers roughly $5 billion a year from Third World countries to North America, and the difference between oil at $20 a barrel and oil at $25 a barrel means the transfer of $70 billion to $100 billion from the poor and impoverished South to the rich and prosperous North. Considering the sharp rise in global oil consumption over the past decade, there is no doubt these figures are even more astounding today.

Regarding the new surge in petroleum prices, the West's quandary over Iran's nuclear issue is of paramount importance. For Iran, the nuclear program is simply a matter of national security aiming to counterbalance the country's chronic energy shortage in a not that far future. Any American uncalculated harsh policy and irrational behavior in bombing the country would obviously force the Iranians into defensive and retaliatory measures ranging from the closure of the world's oil throat, the Hormuz Strait, to attacking oil tankers and possibly targeting major oil fields in the southern part of the Persian Gulf. Such a worst-case scenario might cost the health of all oil-importing economies dearly.