- Hassett added that recent military developments involving Iran suggest a swift resolution may be approaching.
- Despite optimism around the conflict’s duration, Hassett cautioned that oil markets could experience temporary price volatility.
- Economist Ed Yardeni warned that the Middle East conflict could result in a 10% to 15% market correction.
White House National Economic Council Director Kevin Hassett reportedly said on Tuesday that ending the conflict with Iran will likely push crude oil prices higher in the short term as markets factor in added risk and highlighted that heightened geopolitical uncertainty could sustain a “risk premium.”
“You got to understand that there’s going to be an incredible risk premium for ending the terrorism of the Iranians.”
— Kevin Hassett, Director, National Economic Council
Military Developments And Timeline
Hassett added that recent military developments involving Iran suggest a swift resolution may be approaching. Hassett stated that U.S. actions have significantly weakened Iran’s military capabilities, adding that the conflict appears to be nearing an end faster than initially anticipated.
Iran’s new Supreme Leader, Mojtaba Khamenei, has reportedly dismissed any ceasefire or de-escalation talks with the U.S., maintaining a firm stance on retaliating against the U.S. and Israel as the conflict in the Middle East enters its third week.
At the time of writing, U.S. West Texas Intermediate (WTI) crude futures maturing in May traded 3% higher at nearly $97 a barrel, and Brent crude futures expiring in May increased 2% at $102 a barrel.
Shipping Activity Signals Shift
According to Hassett, early signs of normalization are emerging in the critical energy transit route, pointing to the gradual return of oil tankers moving through the Strait of Hormuz, a key passage for global crude shipments, as evidence that disruptions may be easing.
The movement of these vessels is closely watched by energy traders as an indicator of supply stability. Despite optimism around the conflict’s duration, Hassett cautioned that oil markets could experience temporary price volatility. He noted that logistical delays, as shipments resume and reach refineries, may lead to short-lived price increases.
In a CNBC interview on Tuesday, economist Ed Yardeni, president of Yardeni Research, warned that the Middle East conflict could result in a 10% to 15% market correction, pointing to the severity of losses in a long geopolitical conflict.
U.S. equities edged higher on Tuesday. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.6%; the Invesco QQQ Trust ETF (QQQ) inched 0.7% higher. Retail sentiment on Stocktwits around the S&P 500 ETF was in ‘extremely bearish’ territory.
For updates and corrections, email newsroom[at]stocktwits[dot]com.