Price of Brent Should Be Higher to Reflect Situation in Iran War, Says Ellen Wald

Ellen Wald, president of Transversal Consulting and senior fellow at the Atlantic Council, said that despite high oil prices she feels the price of brent should be even higher to reflect the reality of the situation amid the war with Iran. Wald said that the US could better insulate itself from the impacts of future energy crises by improving the interdependence between the US, Canada and Mexico in North American oil production.

President Donald Trump’s public comments about the Iran war reflect a growing frustration he has communicated privately to those around him, as the disruptive conflict stretches into a second month without a clean exit strategy.

Trump has told associates that he is angry with North Atlantic Treaty Organization members and other allies, said people familiar with his thinking. With the war dragging on, Trump sees some partners as unwilling to do enough to help achieve a decisive end to the conflict.

The president has aired some of those grievances in public, exhorting allies on Tuesday to “go get your own oil” despite Iranian threats effectively closing the vital Strait of Hormuz, which has sent global fuel prices soaring.

“You’ll have to start learning how to fight for yourself, the U.S.A. won’t be there to help you anymore, just like you weren’t there for us,” he posted on social media.

Trump has vacillated between claiming progress in diplomatic talks with Tehran and threatening to escalate strikes as he becomes increasingly insistent about obtaining a ceasefire.

The president realizes that the current situation is untenable, according to another person familiar with his thinking who requested anonymity to discuss private deliberations.

Recently, the president’s team has suggested that reopening Hormuz — which carries roughly 20% of seaborne oil supplies — may not be a necessary condition to end the war. The S&P 500 gained 2.9% and the Nasdaq Composite added 3.8% on speculation that the US and Iran may be looking for a way out of the conflict. West Texas Intermediate futures fell 1.5% to settle near $101 a barrel.   The recent surge in gasoline prices has car shoppers at Morris Smith’s Kansas auto dealerships recalculating how large of a monthly payment they can afford.

That’s a bad sign for an industry already bracing for a slowdown in sales.

With new-car prices hovering near record levels, some shoppers are switching to Smith’s used-car lot. Others are choosing to hold on to their cars for longer rather than shell out the roughly $50,000 commanded by the average new vehicle in the US, said Smith, who owns Ford dealerships in Leavenworth and Larned, Kansas.

“If gas prices stay inflated, it will become a huge factor and just really make it even more difficult from an affordability standpoint,” Morris said in an interview. Gas prices remaining at elevated levels for several months risks putting additional pressure on US auto sales that were expected to decline even before the Iran war began in late February.

Worries about inflation created by the conflict have reduced expectations, at least in the near term, that the Federal Reserve will lower interest rates. That could delay relief sought by car shoppers facing huge monthly payments, which reached an all-time high of $773 on average in the first quarter, according to industry researcher Edmunds.com.

“The current Middle East conflict adds a tremendous amount of uncertainty to the vehicle market,” Charlie Chesbrough, senior economist for researcher Cox Automotive, said in a March 25 media call. “A prolonged conflict could create a much more negative outlook.” New car deliveries in the first three months of the year likely fell by more than 6%, according to forecasts from Edmunds and Cox. American consumers purchased an estimated 3.7 million vehicles in the first quarter, down from the year-earlier period when sales jumped on buyers snapping up new models to get ahead of tariff-induced price increases.

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