Kevin Hassett, the White House National Economic Council Director, said energy prices will drop sharply once the Strait of Hormuz reopens.
The prediction suggests a significant shift in global energy markets that could lower the cost of living for consumers by reducing inflation. Because the Strait is a critical chokepoint for global oil transit, its operational status directly impacts the availability and cost of fuel.
Speaking on CNBC's "Squawk Box," Hassett said the market would see "more oil than you've ever seen" [1]. He said the reopening of the waterway will allow for a surge in supply, easing the constraints that have kept prices elevated. This increase in flow is expected to include more than 100 ships daily [2].
This projected influx of supply is expected to drive down costs across the energy sector. Hassett said energy prices are going to fall like nothing people have seen before [3]. This follows a period of volatility where WTI prices were referenced at $79 per barrel [2].
Beyond the immediate cost of fuel, the administration believes the move will have a broader macroeconomic effect. Hassett said inflation will drop sharply once the Strait of Hormuz reopens [4]. This follows a trend of price adjustments, including a 21% drop seen during the spring [2].
While the specific timeline for the reopening was not detailed, the White House economist said inflation is expected to fall further by the end of the year [4]. The administration is pinning its hopes on the restoration of normal traffic to stabilize the global economy.
“More oil than you've ever seen.”
The White House is linking domestic inflation relief directly to geopolitical stability in the Persian Gulf. By emphasizing the volume of oil that can move through the Strait of Hormuz, the administration is signaling that supply-side shocks, rather than just monetary policy, are the primary drivers of current energy costs.
