Oil prices are climbing, and the Strait of Hormuz remains closed. According to current estimates, Brent has reached over 109 dollars a barrel, and analysts are warning - if the passage stays closed for a few more weeks, the world could see triple-digit oil prices as the standard floor.

Why is the Strait of Hormuz so important? Roughly 20 percent of the world's total daily oil consumption passes through this tiny chokepoint in the Persian Gulf. A large share of crude from Saudi Arabia, Iran, Iraq, Kuwait and the UAE flows through it. Translation: if this shuts, the entire global energy market suffers.

Diplomatic efforts to de-escalate are stuck. Both sides - the United States and Iran - are clinging to maximalist demands. Washington wants the blockade lifted with no conditions. Tehran wants negotiations conditional on full removal of sanctions. There is no room for compromise, at least not right now.

For the Balkans, this means a lot. Macedonia imports virtually all of its petroleum products. Pump prices here are tied directly to global crude prices. If Brent stays above 100 dollars for another month, citizens will pay 2.5 - 3 euros per litre for petrol and diesel. That's a price we last saw during the pandemic and the early stages of the war in Ukraine.

What can the domestic economy do? Not much. The Energy Regulatory Commission can use temporary stabilisation mechanisms, but they only work for a few weeks. The long-term hit to Macedonian household and corporate budgets is unavoidable. And as a rule, an oil price shock is always followed by a price shock on everything else two or three months later.

Global markets are still trying to absorb the shock, but without a quick diplomatic solution, we're heading into an era where energy prices will be significantly higher. And we're getting there with no serious strategy from any political party in the current situation. As usual, we pretend it won't be a problem until it obviously becomes one.