Rising tensions in the Middle East and threats by Iran to target ships passing through the Strait of Hormuz could cause short-term economic disruptions but may not lead to a prolonged global energy crisis, Tomas Philipson and Mike Lee told Newsmax on Wednesday.
The Strait of Hormuz is one of the most critical energy chokepoints in the world, with roughly 20 million barrels of oil, about one-fifth of global supply, passing through the narrow waterway each day.
Recent threats by Iranian officials to attack ships attempting to transit the strait have already disrupted shipping traffic and pushed energy prices higher amid the escalating conflict involving Iran, the United States, and Israel.
Energy analysts warn that if disruptions persist for several weeks, oil prices could climb significantly higher and further strain global supply chains already facing delays.
Philipson, former chairman of the White House Council of Economic Advisers, said on Newsmax's "National Report" that the recent spike in gasoline prices appears limited compared with historic energy shocks.
"That's a big difference between this administration" and the Biden administration, Philipson said.
"[Former President Joe] Biden was essentially a shadow member of OPEC by restricting supply of the use of the U.S. through regulation and legislation, which is what ... a good cartel member would do," he continued.
Philipson said the current price pressures remain far smaller than past geopolitical oil shocks.
"If you compare it in historical context, the oil embargo in the '70s was 400% increase in oil prices. Gulf War was 200%. The Russia-Ukraine war were up to 120. So this seems to be a short-run phenomenon, at least now," he said.
He added that global supply could adapt if disruptions continue.
"In the long run, I think we can rely more on other regions, including the U.S., for filling the supply shortage that this is enabling," Philipson said.
According to AAA data cited during the discussion, the national average price for gasoline recently rose to $3.20 per gallon, up from $2.99 just two days earlier.
Shipping disruptions are also raising concerns about global supply chains and the potential breakdown of so-called just-in-time inventory systems, in which companies receive materials exactly when they are needed.
Mike Lee, founder of Mike Lee Strategy, said the broader economic impact will depend largely on how long the conflict lasts.
"I think it all comes down to the length of the conflict," Lee said.
"If this gets dragged out for months and for months and for months, it's going to have an economic impact both through the cost of energy, because it's not only oil, it's the price of natural gas that travels through there," he said.
Lee said global shipping logistics could also be affected if the disruptions persist.
"And then all of the other global shipping logistics and that is going to have more of an effect on our European partners than, say, the United States," he said.
However, Lee said current market expectations suggest the disruption may be temporary.
"If this is over in a few weeks, which seems to be what the smart money is betting on, you can look at minor temporary supply shocks, slightly higher gasoline in certain pockets," he said.
Philipson also noted that congestion is already building near the critical waterway.
"There is a lot of congestion in the Strait of Hormuz right now," he said.
"It's about 24 ships that go through every day there, and that's been stopped. And maybe a couple of them come through. Right now there's I think there's more than 150 ships sitting there waiting to get through," Philipson said.
"So it's going to be congested and it's going to affect things in the next few weeks, even if the conflict settles down," he added.
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Theodore Bunker ✉
Theodore Bunker, a Newsmax writer, has more than a decade covering news, media, and politics.
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