00:00 Speaker A
20% of the world’s oil flows through the Strait of Hormuz.
00:02 Speaker A
There is no benefit to being locked up in the Persian Gulf.
00:05 Speaker A
So in order for 20% of the world’s supply to enter the world market, it needs to go through this straight line,
00:10 Speaker A
Currently completely closed.
00:13 Speaker A
So this is a huge shock to the oil market.
00:16 Speaker A
For the world economy, it may not be that important, which is another part of the story.
00:20 Speaker A
Unfortunately for the United States, the fact that we don’t import significant amounts of oil from the Persian Gulf simply doesn’t matter.
00:26 Speaker A
This is a global market and the price of oil is the price of oil.
00:29 Speaker A
U.S. oil companies benefit from higher prices, but that doesn’t do you or me any good.
00:32 Speaker A
One thing to add here, though, is that if we’re actually asking who was injured,
00:36 Speaker A
In fact, American consumers are hurt more than European or Asian consumers, even though we produce a lot of oil and they don’t.
00:41 Speaker A
The reason is that we only drive large cars. We drive less fuel efficient vehicles.
00:47 Speaker A
The United States is much less oil-intensive than it was in the 1970s, but much more oil-intensive than Europe or Asia.
00:51 Speaker B
We also drive longer distances, I think.
00:54 Speaker A
People are paying more at the pump, people are paying more to heat their homes, and while oil companies’ profits are up, that may not boost demand much. So demand took a direct hit.
01:00 Speaker A
Then it hits you. I mean, while the impact of inflation may be muted,
01:05 Speaker A
That might still be enough to mean the Fed won’t cut interest rates.
01:08 Speaker A
Therefore, the impact of capital markets on yields is not favorable.
01:13 Speaker A
The U.S. economy looks fragile.
