Peter Navarro told Newsmax on Tuesday that President Donald Trump's focus on the Strait of Hormuz reflects the strategic and economic stakes of keeping the crucial oil shipping lane free from Iranian threats.
Navarro, the White House senior adviser for trade and manufacturing, told "Rob Schmitt Tonight" that Iranian activity around the narrow waterway has long imposed what he called a "terror premium" on global oil prices, adding billions in costs to the world economy.
"I want to explain the Iran terror premium," Navarro said.
"When President Trump says that after this is over we get the other side of it, oil prices will not only go back down to the $60 range, they'll be lower over time."
Trump on Monday warned Iran against mining the Strait of Hormuz, through which roughly a fifth of the world's oil supply passes.
U.S. Central Command said earlier Tuesday that the U.S. Navy sank 16 Iranian mine-laying vessels in the strait.
Navarro argued that Iran's geopolitical behavior over decades has artificially inflated global energy prices.
"For over 45 years, because of the geopolitical risk associated with Iran's terror, with its terror through proxies like Hamas, Hezbollah, and the Houthis, what that has done — and there are well-documented studies on this — is effectively raise the price of a barrel of oil $5 to $15 above what otherwise market conditions would dictate," Navarro said.
He added the economic impact has been enormous.
"Its cost over these 45 years [is] something like $10 trillion of slower GDP growth," Navarro said.
"So, to neutralize the Iranian terror is to get rid of this Iran terror premium on oil," he added.
Navarro said the issue is closely tied to the Strait of Hormuz, the narrow shipping corridor between Iran and Oman that serves as one of the most important energy choke points in the world.
"It all hovers around this Strait of Hormuz and the accident of geography that gives us a terrorist state in Iran near that strait," he said.
Navarro said Trump is the first leader to recognize the economic dimension of the problem alongside the national security threat posed by Iran's missile and nuclear programs.
"And it's not just that there's an imminent national security threat because of the ballistic missiles and the nukes that Iran has," Navarro said.
"It's also this Iran terror premium that we can stop paying and the world will stop paying," he said.
Navarro said the global implications remain significant even though the U.S. has become energy independent under Trump.
"It's a beautiful thing that Donald Trump's policies, going back to the first term, have allowed us for the first time in decades to be energy independent, oil independent," Navarro said.
But the global economy still depends on stable oil markets, he said.
"We're in a world where we also trade with other countries, particularly in Asia, and Asia will bear a heavy brunt of this," Navarro said.
"Europe will have their heavy brunt.
"If we can solve the problem, it will help our global economy and us as the world kind of flows with all its trade," he said.
Navarro said stabilizing oil markets by eliminating the Iran risk factor would boost global growth.
"The boss is playing three-dimensional chess and understands that basically having a good global oil market that isn't subject to the Iran terror premium is really the key to global prosperity," Navarro said.
"Remember, it's $10 trillion they've already extracted from the global economy in terms of gross domestic product drag — that's got to stop," Navarro said.
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