US Economy Could Be In Dire Straits As Hormuz Slams Shut
. . .Brent crude, the oil blend that sets worldwide prices, has jumped 24% to over $90 a barrel since Operation Epic Fury began. The highest Brent price of Trump’s second term is already impacting U.S. gasoline prices.
Despite the U.S.-backed war risk insurance that President Donald Trump offered all maritime operators in the Strait of Hormuz, traffic remains down 90% since Iranian retaliatory strikes began. Refineries have no way to ship their oil, and some are halting extraction as storage facilities hit capacity.
U.S. gasoline prices move in tandem with Brent crude. For every $10 Brent increase, U.S. gas prices rise roughly 24 cents per gallon. Since striking Iran, the AAA national gas average price increased from $2.98 to $3.32. Gasoline prices haven’t risen comparably since the Russia-Ukraine War began in March 2022.
A sustained 25-cent-per-gallon increase in gas prices raises inflation by about 0.25 percentage points, according to the Federal Reserve. If the Strait of Hormuz is reopened and oil exports resume, prices could return to pre-war levels.
Very Large Crude Carriers, ships capable of carrying roughly 2 million barrels of oil, saw their daily rental prices skyrocket from $206,000 to over $480,000 since markets opened Monday. The rate-doubling results from continued war risk insurance issues and a dearth of vessels willing to brave the increasingly dangerous Strait. (Read more from “US Economy Could Be In Dire Straits As Hormuz Slams Shut” HERE)
