White House Economic Advisor on Iran War Impact (with Becky Quick, Andrew Ross Sorkin)

Asking about the situation in Iran and what it means for oil prices and inflation longer term.

Becky Quick

Kevin Hassett

We are getting briefed on every nuance of the war daily. President Trump's timeline is four to six weeks and we're ahead of schedule. Tankers are starting to dribble through the straits, showing how little Iran has left.

We've destroyed Iran's military, coordinated 135 countries in the UN, and coordinated strategic reserve releases from 35 countries.

Kevin Hassett

We're very optimistic this will be over in the short run, then there'll be price repercussions for a few weeks as ships make it to refineries.

We have a plan for every corner of disruption from fertilizer to getting fuel to the West Coast. Highly confident we have this under control.

When you say end soon, you think weeks not months. Where do you expect WTI prices?

Most analysts don't think prices will come back down to the 60s anytime soon.

Becky Quick

Kevin Hassett

Futures markets have oil going down into the 60s by fall, down to the 50s past the year. There will be an incredible risk premium for ending Iranian terrorism.

Iran has destroyed its own economy and discouraged investment in the entire Gulf region. We're moving toward a world where Middle East energy is accessible through free markets without extortion, which will drive oil prices down in the long run.

Kevin Hassett

The US economy is fundamentally strong with strong signs of productivity growth. Iran's strategy to hurt the US economy hasn't worked.

Business Roundtable CEOs were in Washington about a week ago and everybody was talking about how solid things look.

What does 'sees this through to the end' mean?

Becky Quick

Kevin Hassett

We want to make sure Iran cannot harm its neighbors and the US ever again. Once we've accomplished that goal and defanged them, President Trump will declare the war over.

We've destroyed the navy, destroyed the air force, finished off most missile sites.

What pressure will European/Asian countries put on us politically, and what pricing increases might we anticipate from imports?

They're more reliant on energy coming through the Strait of Hormuz.

Becky Quick

Kevin Hassett

Asian economies might pull back refined product exports to the West Coast to ensure enough energy for themselves. We're studying this closely but haven't seen disruptions yet.

The US is a net exporter but has pockets like California, Alaska, East Coast importing oil partly due to Jones Act limitations.

What impact will this have on the Chinese economy?

When they get a cold, we get a cold.

Andrew Ross Sorkin

Kevin Hassett

If the Iran problem goes away, it will be helpful for China as well. Both countries want a stable world oil market.

The Chinese didn't veto the UN resolution condemning Iran and are highly reliant on Iranian oil.

When you math out possibilities, what timeline are you working with?

10 days, 30 days, 60 days, or different timeline?

Andrew Ross Sorkin

Kevin Hassett

Base case is President Trump's four to six week program, and we're in the third week ahead of schedule. If extended, it wouldn't really disrupt the US economy very much.

I get paid to worry. We're very confident this thing is going ahead of schedule.

What's your plan for fertilizer and helium supply disruptions through Hormuz?

You can't get fertilizer there late if you need to plant crops.

Becky Quick

Kevin Hassett

We've been finding other fertilizer sources successfully - established licenses for Venezuela, discussions with countries with potash reserves. We can minimize disruption.

Qatar supplies about 20% of US fertilizer. We're focused on US farmers.

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