Justin Wolfers Says Hormuz Strait Isn't 'Either Open Or Closed' And It Is That 'Uncertainty' That Could Push Oil Past $100
Economist Justin Wolfers on Monday warned that uncertainty surrounding the Strait of Hormuz, rather than a prolonged closure itself, could send oil prices back toward $100 a barrel as companies weigh the risk of future supply disruptions.
Shipping Confidence At Risk
In an interview with CNN shared on X, the University of Michigan economist said the waterway has alternated between being open and closed, making it difficult for businesses to plan shipments and energy trade.
Wolfers compared the situation to “my dog coming into my house and out of my house,” adding that the bigger risk is not whether the strait closes on any given day, but whether companies can trust it will remain open long enough to move cargo.
“If people can’t be sure that the door is going to remain open, they’re not going to be willing to send ships,” he added.
Oil Could Climb Again
Oil prices have eased from recent highs, Wolfers said, adding that the prices remain above where they likely would have been had the conflict with Iran not occurred.
He believes that any further escalation in the region or longer-lasting supply disruptions could send crude prices climbing again toward the $100-a-barrel mark.
Crude oil traded above $79 a barrel on Tuesday, up nearly 2% from a day ago and more than 10% for the week.
Tensions Around Hormuz Persist
Washington and Tehran continue to clash over the strait after Trump proposed a 20% fee on cargo using the waterway and reinstated a blockade on Iranian vessels.
Iranian Foreign Minister Abbas Araghchi rejected the proposal, saying Iran, not the United States, is the rightful guardian of the strait and would remain so “forever.”
The blockade is scheduled to take effect at 4 p.m. ET on Tuesday.
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