Rising oil and gasoline prices are once again threatening the U.S.
economic recovery. It is no surprise that the root cause is geopolitical
turmoil in the Middle East – this time related to Iran’s nuclear
ambitions and potential disruptions in oil supply
At this point, it is the threat of Iranian oil supplies being removed
from the market that is pushing prices higher. Saber rattling by Iran
is contributing to the speculative price spike, perhaps a key strategy
to maximize its oil revenue even with weaker volumes. West Texas
Intermediate (WTI, the leading benchmark in U.S. oil pricing) passed the
$100 threshold and crossed $110 per barrel briefly. Brent crude, the
other pricing marker, surpassed $120 per barrel.
Rising oil prices will harm U.S. economic growth. But what is the
likely magnitude? Higher oil prices have played a role in U.S.
recessions since 1973.
