What happened
Fears of a global economic shock spread this week after Iran effectively shut off a crucial Middle Eastern shipping route and launched drone and missile attacks on energy infrastructure in its oil-rich neighbors. Iran said it had closed the Strait of Hormuz, a narrow waterway through which one-fifth of the world’s oil travels. “If anyone tries to pass, the heroes of the Revolutionary Guard and the regular navy will set those ships ablaze,” warned Ebrahim Jabari, senior adviser to the Guard’s commander. About 3,200 vessels—4% of global ship tonnage—were stuck in the Persian Gulf. At least five oil tankers were hit by drones or other projectiles, while a top global natural gas exporter in Qatar suspended production after Iran attacked two of its sites. Saudi officials intercepted two drones targeting an oil refinery, and debris from a downed drone started a fire at an energy hub in the United Arab Emirates.
Oil and gas prices surged, prompting concerns that inflation could rise and productivity slow as a result of the supply shocks. The global oil benchmark Brent jumped from about $70 a barrel to $81 a barrel, while natural gas prices spiked across Europe. U.S. gasoline prices rose by about 11 cents a gallon, hitting $3.11. To head off a potential energy crisis, Trump said the Navy would, if necessary, escort tankers through the strait and ordered the U.S. International Development Finance Corp. to insure ships in the Gulf. “No matter what, the United States will ensure the free flow of energy to the world,” he declared.
What the columnists said
“Whether President Trump wins the Third Gulf War will depend a lot on whether the Pentagon can effectively reopen the Strait of Hormuz for oil shipping, and soon,” said Javier Blas in Bloomberg. The clock is ticking. Crude production is continuing in the region, but if ships can’t get to their ports, oil-producing nations “will need to start slowing their output— which will exacerbate the spike in crude prices.” We are talking days before this happens, not weeks.
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“The real news is that prices haven’t shot up more,” said The Wall Street Journal in an editorial. Oil is actually cheap by historical standards: After Russia invaded Ukraine in 2022, crude climbed above $120 a barrel. Prices are now about where they were in 2023 and 2024. War critics may be trying to raise “false inflation alarms” and pressure Trump “into wrapping up his Iran campaign prematurely,” but “he shouldn’t take the bait.”
America is less dependent on Middle Eastern oil than it used to be, said Chris Isidore and Matt Egan in CNN.com, but no matter how much oil we produce, it’s “traded in a global market.” We export almost one-third of oil produced domestically and import nearly one-third of oil consumed by Americans. There’s also concern about damage to various oil facilities and how long it will take them to resume normal operations. What you pay at the pump is still dictated by “supply and demand around the planet,” and traders right now “are alarmed.” It means $100 a barrel isn’t far off.
