The impact of high oil prices will be rough.
'But any success in tightening sanctions on Iran could squeeze global oil supplies, pushing up prices and causing serious economic repercussions at home and abroad.â??Itâ??s a bind for Obama,â? said Mr. Kloza at the Oil Price Information Service. â??How do you get tough on Iran without getting tough on American wallets?â? - New York Times
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I think the answer is obvious: over the short-term, you can't.
But Iran is one facet in surging prices. Increased demand from Asia and a recovering U.S. is another. This analysis (pdf) of the global oil market from Citi Group's Edward Morse points to sustained triple digit prices through 2012.
It's interesting to contemplate the implications of persistently high oil prices. Economist Jeff Rubin, for instance, has argued that it would precipitate a "de-globalization" as supply chains that were economically attractive when oil was cheap collapse under the weight of sustained triple digit prices.