A new source of global uncertainty has emerged surrounding crude oil prices in the aftermath of increased friction between Iran and Saudi Arabia.

Most global analysts still downplay the possibility of a spike in oil prices, predicting that the bilateral tension will not reach boiling point. Some allege the eventual goal of Saudi Arabia lies not in religious conflict with Iran, but in preventing Iran from snatching some of its market share. Saudi Arabia has also been in persistent competition with U.S. shale gas producers.

Korea’s economic policymakers, nevertheless, should not be negligent in monitoring for negative effects on the local economy from the diplomatic rupture between the two most powerful countries in Muslim society.

Crude prices used to show great volatility whenever geopolitical risks built up in the Middle East. Recent cases included Saudi Arabia’s battles with rebels in Yemen as well as the jihadist group Islamic State’s provocations.

Korea’s economy has yet to see a full recovery despite a variety of stimulus packages last year.

A surge in international crude prices could bring about rapid consumer price growth. This may have a terrible impact on the economy – the specter of stagflation, in which stagnation and inflation coexist.

The Bank of Korea is raising concerns about the low consumer price growth, which stayed at 0.7 percent in 2015 compared to the previous year. And it has set the target at a 2 percent prices growth in the coming years.

But the central bank has failed to offer a detailed explanation of why the movement of nominal prices it monitors does not match what housewives are feeling in the stores.

According Statistics Korea, prices of daily necessities including vegetables grew 2.1 percent in 2015, compared to 2014. Further, research from the Korea Rural Economic Institute showed that the consumer sentiment index for goods prices climbed 12.2 percent over the same period.

The cheap oil prices are fortunately benefiting Korea in terms of drivers’ consumption of gasoline and diesel as well as enterprises’ industrial use of petroleum for factory operations.

A sudden rebound oil prices in addition to the rising prices of basic necessities would critically deteriorate the purchasing power of the nation’s households, whose combined debt has reached a record-high of 1.16 quadrillion won ($975.6 billion).

South Korea, which depends entirely on imports for its oil consumption, has no choice but to hope the U.S. will successfully arbitrate in the Saudi-Iranian dispute.

And policymakers need to closely study the case of Brazil, which is estimated have posted a negative growth of minus 3.6 percent in gross domestic product and consumer prices growth of above 10 percent last year. The Brazil case goes beyond ordinary stagflation as its government’s fiscal soundness has worsened.

Some local analysts forecast that crude prices could shoot up anytime, as long as oil producers do not continue their game of chicken year after year. An impending oil shock might be lying dormant.