If Iran got The Bomb, gasoline prices would rise by $1.40 per gallon on the back of a 25% spike in world oil prices. Within three years the global price of oil would rise 50% as Saudi Arabia followed Iran into the club of nuclear nations and the oil markets tacked a massive geopolitical risk premium onto oil supplies. From today’s oil prices that would imply a jump up to a sustained $120 a barrel — and on to $150 a barrel in three years.
For the United States, which consumes roughly 18 million barrels of oil a day, a sustained $20 per barrel increase would cost us $130 billion a year. Multiplied across world consumption of about 85 million barrels per day, and the cost would be $620 billion a year.
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