President Donald Trump said Wednesday that the conflict with Iran will come to an end soon, but the prime-time White House address did little to offer markets reassurance that the supply of oil in the Middle East will start flowing again. On Thursday afternoon, the West Texas Intermediate price of oil, the American benchmark, soared nearly 12% higher than it was before Trump’s speech, hitting over $112 per barrel. This was even higher than the European benchmark, Brent, which was up around 6.6% at over $107 per barrel.
The markets reflect a feeling that there will be no immediate opening of the Strait of Hormuz, a narrow waterway off the coast of Iran through which 20% of the world’s oil flows.
The situation will impact prices of almost every consumer product manufactured, though how much and when remain a matter of speculation. Here’s a look at some of the primary goods that will see price increases in the coming days.
Trump: “We don’t need it”
In his speech, Trump tried to assure the U.S. that we produce enough energy to satisfy demand. “We produce more oil and gas than Saudi Arabia and Russia combined. And we’re in great shape for the future. The U.S. imports almost no oil through the Hormuz Strait and won’t be taking any in the future. We don’t need it,” the president said.
While the U.S. produces a lot of oil and imports very little oil from the Middle East, Americans will be competing with global demand. Major restrictions on supply anywhere in the world impact prices everywhere.
Every consumer product is produced by millions of supply chains stretching across hundreds of countries. While wind and solar supplies about 15% of the electricity generated worldwide, electricity is only about 21% of the total energy consumed. The bulk of it is industry and transportation, so those supply chains are powered almost entirely by fossil fuels.
Besides the energy powering those supply chains, countless products are derived from oil and natural gas. That means there’s really no product that won’t, to some degree, be impacted by rising oil prices.
Gasoline and diesel prices
