Americans are already starting to feel the economic fallout of President Donald Trump’s war with Iran. Traffic through the Strait of Hormuz, which carries about a fifth of the world’s oil production, has effectively ground to a halt due to the ongoing U.S.-Israeli joint military operation in the region.
On Wednesday’s “Morning Joe,” economic analyst Steve Rattner broke out his charts to show how Americans will pay the price for the administration’s actions.
As Rattner explained, the strait is “critically important” to ensuring adequate oil flow across the globe, servicing “all the big oil-producing countries in the region: Kuwait, Saudi Arabia, Qatar, the United Arab Emirates.”
Due to the military activity in the region, commercial travel through the passageway has stalled.
“It’s too dangerous,” the former Treasury official explained, “insurance companies won’t insure tankers going through there.”
Rattner said the disruption is “already having an impact on what people pay at the pump.”
“Oil prices were actually rising a bit already for a variety of reasons, including the tensions in the Middle East that scared the markets,” he said, pointing to a chart that showed increases since mid-January.
Then, as Rattner explained, when the United States and Israel launched their attack on Iran last week, it resulted in a “big jump” in prices.
“That has already turned into higher gas prices,” he added. “Gas has already gone from $2.98 to $3.11, just in the last four days across the country.”
Although prices have increased, Rattner stressed that Americans should not have to worry about a lack of supply of oil.
“The good news for us is that we’re not going to see gas lines again like in 1973,” he said, referencing the economic crisis that resulted from an oil embargo, “because we have gone from being a huge importer of oil, net importer of oil, to actually being a net exporter of oil.”
“Supply is not our problem,” he continued. “But because oil is a worldwide commodity, it trades at a worldwide price; we do feel the impact on prices, but we shouldn’t feel the impact on supply.”
However, Rattner also warned that continued disruption could affect much more than just prices at the pump.
“It’s also not just gasoline that goes up in price,” he said. “It’s everything else that comes from petroleum, which includes jet fuel, home heating oil, things that go into petrochemicals that are made from petroleum. So there could be a significant inflationary impact.”
You can watch Rattner’s full analysis in the clip at the top of the page.
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