Oil prices soar, the world pays the bill! Crude oil once again breaks above $110, putting pressure on everything from food to mortgages.

Title context: Oil prices soar, the world pays the bill! Crude oil once again breaks above $110, putting pressure on everything from food to mortgages. Text: As international oil prices surged to $110 per barrel, a five-month high, and persistently climbing natural gas prices in Asia and Europe hit their highest levels since December 2022, this sharp energy cost shock is affecting household budgets worldwide. Undoubtedly, rising energy prices are being transmitted to everyday consumption through transportation, heating, fertilizer and packaging costs, and are raising housing financing burdens through inflation and interest rates. During the Asian session on October 22, Brent crude traded near $111.60 per barrel, up nearly 2% intraday; calculated from the close of $72.48 on February 27, the last trading day before the Iran war broke out, the cumulative surge is about 52.8%. Judging from a series of statistics, the energy shock has clearly exacerbated the upward movement in U.S. inflation indicators. September CPI rose 0.6% month-on-month and was up 3.7% year-on-year; gasoline prices rose 9.1% month-on-month, contributing more than half of the overall monthly increase. Core CPI rose 0.3% month-on-month and 2.6% year-on-year, but food prices unexpectedly remained flat that month, and further pass-through of higher transportation, fertilizer and packaging costs to end-food prices remains a subsequent inflation pressure. Oil and gas shock penetrates household budgets, geopolitical premium returns to market pricing In addition to driving up transportation and heating costs, the frenzied rise in energy prices since the start of this year has also increased upward pressure on food, clothing and packaging prices, and helped keep U.S. and global inflation indicators and borrowing costs elevated, causing market expectations for rate hikes by global central banks including the Federal Reserve, the European Central Bank and the Reserve Bank of Australia to continue to heat up. This resurgent inflation wave, along with the frenzy of AI-related debt issuance under the unprecedented AI infrastructure expansion trend, has pushed yields on 10-year and longer-dated U.S. Treasuries to near their highest levels in more than two decades. European natural gas also crossed an important threshold: Dutch TTF front-month futures traded at 90.10 euros per megawatt-hour on the 20th, breaking above 90 euros for the first time since December 2022; on the 21st they fell back to 87.40 euros, but were still up about 20.8% from the end of September. The latest risk comes from Houthi attacks on Saudi airports and large oil and gas fields, as well as Iran's claim that multiple large transport vessels near the Persian Gulf and Hormuz were attacked by munitions or hit mines, putting energy supply and shipping security under pressure again. International shipping costs are also rising sharply against the backdrop of climbing crude oil and natural gas prices and geopolitical crisis, and the surging shipping costs are also accelerating their penetration into all industries along with energy inflation. The risk of ship attacks in the Strait of Hormuz, an increase in ship-to-ship transfers and tight availability of tankers are jointly pushing up transport costs, further translating geopolitical conflict into major pressure on the landed energy costs of importing countries such as China, Japan, South Korea and India. According to the latest verifiable public data as of October 22, the Drewry World Container Index (WCI) stood at $4,485 per 40-foot container on October 15, up about 102.7% from $2,213 on December 25, 2025, roughly doubling. More directly related to energy costs, the Baltic Exchange's TD3C benchmark route for 270,000-tonne Middle East Gulf-China crude oil transportation, priced in Worldscale (WS), has risen from WS74.17 on January 9 this year to WS1281.25 on October 16, a cumulative increase of about 1627%, reaching 17.3 times the level at that point early in the year. On the Russia-Ukraine war situation, the Kremlin said Putin agreed to resume U.S.-brokered peace talks as early as November; but Ukraine had previously resumed attacks on Russian refineries, and damaged capacity, limited export surplus and Black Sea transportation costs still constrain the recovery of Russia's diesel supply. Negotiation expectations can lower the risk premium, but actual supply recovery takes time. In addition, diesel crack spreads remain in an extremely high historical range, which also means that the heavy pressure of refined product inflation may continue to expand in a penetrating manner into actual global production and consumption for some time to come. The relevant U.S. spread reached $118.62 per barrel on September 14; recently the New York Harbor distillate crack spread remains above $100, while the European ICE diesel crack spread has fallen back to $78.77 but remains at a historically high level. This trend also continuously shows the fuel cost pressure that residents continue to bear, along with expensive crude oil and refined product shortages. Under the heavy pressure of continuously rising inflation, the U.S. Treasury market and even the global benchmark for financing costs are showing high-level volatility: the 10-year yield reached 5.34% in early October and fell back to about 5.11% during the Asian session on the 22nd, reflecting the confrontation and standoff between inflation pressure and safe-haven buying. On the 21st, strong results and future outlook from the tech industry led by AI and commercial space leader SpaceX pushed the Nasdaq higher, while Asian markets remained under pressure on the 22nd. From this perspective, demand growth for a series of AI applications such as AI agents still needs to be continuously converted into profits and cash flow in order to absorb the heavy burden of elevated AI financing costs; for data center companies that rely on debt to expand, energy and interest rate pressures will jointly raise the threshold for project returns. From groceries to housing loans: high oil prices penetrate people's daily lives The following charts comprehensively show some of the ways this round of energy price increases is weighing on daily life around the world. The geopolitical crisis has pushed Brent crude above the important $110 threshold and may even further test the historical high of around $120 during the massive outbreak of the Russia-Ukraine conflict in 2022. The Iran war has pushed global diesel prices to record highs. This month, the average retail price of diesel at UK filling stations reached 2.00 pounds ($2.64) per liter for the first time; U.S. diesel prices reached a record high of $6.53 per gallon in September. To that end, U.S. President Donald Trump allowed everyone to use red-dyed diesel until the end of this year. This diesel is typically used for vehicles and equipment that do not travel on public roads and is exempt from road tax. The impact also extends to global mortgage benchmark rates - rising energy prices push inflation higher, and major central banks are curbing it through rate hikes. The chart below shows oil price trends moving in sync with UK mortgage rate expectations. UK inflation and government borrowing both rose by more than expected last month. The Office for National Statistics said the September increase was driven by higher gasoline and diesel costs, pushing inflation to its highest level since October 2025. The Reserve Bank of Australia raised its cash rate last month to the highest level in 15 years, driving up the country's predominantly variable-rate housing loan rates in tandem and putting pressure on house prices. For a home purchase with an average loan amount of A$731,000 ($513,966) over 30 years, with the rate rising from 5.5% in 2025 to the current 6.2%, annual repayments would increase substantially by about A$3,900 ($2,742). As shown in the chart above, global central banks including the Federal Reserve and the European Central Bank have entered a new rate-hiking cycle; the rate hikes taken to curb stubborn inflation exacerbated by high fuel costs have begun to increase the burden of Australian mortgage repayments. Meanwhile, U.S. 30-year mortgage rates have risen from about 6.1% to about 7.5%, increasing borrowing costs for potential homebuyers, and home purchase loan activity has weakened accordingly. Most borrowers choose fixed rates. Other parts of household budgets are also being hit, especially for households that rely on heating oil to get through the winter. Data from the National Energy Assistance Directors Association show that heating bills in New York State may rise 47% from last year. As shown in the chart above, diesel prices have soared, and U.S. heating oil spending is expected to increase substantially this winter. The UK mainly uses natural gas for heating. Energy UK estimates that household energy bills may rise 10% year-on-year this quarter. Most plastics are made from oil or natural gas, processed into polymers used to make everything from bottles to sneakers, as well as polyester fabrics used in clothing, so the impact of rising crude oil prices is even broader. Consultancy MAT said that for common groceries, whether using plastic, paper or glass, packaging typically accounts for 5% to 15% of a product's manufacturing cost. As shown in the chart above, prices of PET, a common polyester fabric material, have risen. U.S. plastic prices in August were up 7% from October 2025. U.S. consumer prices accelerated in September, with soaring gasoline prices contributing more than half of the increase. As shown in the chart above, the producer price index tracking U.S. rubber and plastic prices has continued to rise sharply. Data from the UN Food and Agriculture Organization show that shipping disruptions, as well as higher fertilizer costs - also made from natural gas - will further accelerate global food inflation and continue into late 2027. As shown in the chart above, the FAO Food Price Index hit a four-year high in September.