Burgum: Iran Energy Price Shock A Matter Of Weeks, Not Months

HOUSTON — The massive energy shock emanating from President Donald Trump’s attack on Iran and the war that followed will last weeks, not months, Interior Secretary Doug Burgum said Tuesday at the POLITICO Pub at CERAWeek by S&P Global.

U.S. oil prices have risen as high as $120 a barrel and made swings of up to $40 in the three weeks since the U.S. and Israel first attacked Iran, which then retaliated by attacking oil and natural gas fields and export facilities in the Middle East and all but closing the Strait of Hormuz, the waterway through which 20 percent of the global crude supply. Average diesel prices have hit $5 a gallon and gasoline is hovering near $4, threatening to strain the economy.

“President Trump is super empathetic as well all about the fact that there has been a temporary increase in pricing,” Burgum added. When asked if he thinks the price increase would last weeks, not months, Burgum agreed: “Yes.”

That increase — about a 50 percent rise in oil prices which threatens to raise the cost for groceries and plastics — has weighed on the president. Trump’s approval ratings fell to 36 percent amid the public’s anger over the war and the steep jump in gasoline prices, according to a Reuters poll released Tuesday. The dissatisfaction threatens to doom Republicans’ attempts to keep control of Congress in this year’s mid-term election.

“We’re doing everything in the Trump administration to drive policies that lower prices across the country,” Burgum said, citing the Energy Department’s release of crude from the Strategic Petroleum Reserve.

The administration also made “two super strategic moves, which is unsanctioning both Russian and Iranian oil that was already sent over, because that puts more barrels on the market.”

Oil industry executives, analysts and investors at the Houston conference have warned that the energy spike could last for months, if not longer, and threatens to be a severe drag on the global economy.

“There's going to be inflation across the board...and the only cure for inflation is recession,” Grant Porter, global chairman of investments at Barclays, said from the CERAWeek conference stage before Burgum started speaking. “That's the cycle.”

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