Economic Impacts of Global Fuel Shortages
CNN’s Kate Bolduan interrupted an economic expert to ask him to repeat his prediction about global fuel shortages looming in the coming days as a result of President Donald Trump’s actions against Iran. The situation has escalated significantly, with at least 1,000 ships reportedly stranded in the Persian Gulf after Iran shut down the Strait of Hormuz in response to the joint U.S.-Israel military operation.
Former Biden administration adviser Amos Hochstein, speaking on “CNN News Central,” warned that the closure of this critical waterway would have far-reaching effects on the global economy. He explained that the impact of such a disruption would soon become apparent, affecting various sectors and consumers worldwide.
Ripple Effects on the Economy
Hochstein emphasized that while it takes time for the effects of such shocks to be felt in the market due to storage capacity, the current situation is different. “Now we’re so far into it that you’re starting to feel it,” he said. Consumers are already experiencing a gasoline price pinch, with an average of $4 per gallon today. This means some people are paying much more than that. Diesel prices are also rising dramatically in the United States and around the world, which will lead to increased costs for food and other goods transported by trucks, whether through Amazon deliveries or regular shopping.
The ripple effects extend beyond just transportation. “Fertilizer and all kinds of other chemicals” will also see price increases, impacting various industries and daily life.
Challenges in Restoring Fuel Supply
Hochstein highlighted the difficulty in restoring fuel supply once a disruption occurs. “What happens when you have a disruption is that when it goes on for a while, when you turn it back on, it’s not like flipping the switch and the light goes back on,” he added. “You now have to start restarting all the production of the oil, the restarting of the production of the gas. Then you have to refine it, then you have to deliver it.”
This process will take time, and the consequences are already being felt. “We have some airports around the world that may run out of jet fuel in the coming days, and planes will have to be grounded,” Hochstein warned.
Airports Facing Jet Fuel Shortages
Bolduan interjected to confirm she had heard correctly. “Wait – so full stop, like, airports are going to run out of jet fuel,” she said.
“Full stop,” Hochstein repeated. “In about a week or so. There’ll be airports around the world that will run out completely, and we’re already seeing it because airports, some airports in the world are restricting how many flights can take off. So in some Asian countries, we’re seeing them limiting the amount of flights already in order not to get to the point where they run out.”
Impact on International Shipping Lanes
The Iran-backed Houthis are targeting the critical Bab el-Mandeb Strait connecting the Red Sea to the Gulf of Aden. Hochstein explained the downstream effects of both these critical shipping lanes being closed to commercial traffic.
“Every day of delay costs more money, so any product that’s on those ships, whether it’s oil or container ships, now gets more expensive,” he said. “When ships take longer to voyage, that also means they’re not available as often because they reach destinations later, so they can’t turn around. So the whole system is getting bogged down.”
Spreading Crisis to Europe and the United States
This crisis, which started in Asia due to its reliance on the Middle East, is now spreading to Europe. “Jet fuel prices are now double the price they were a month ago, double, and they will run out of fuel, and then it’s already starting to come to the United States,” Hochstein noted. “Any American that is thinking about traveling this spring and summer is going to have a rude awakening if they haven’t bought their tickets yet. Those plane tickets are going to cost a lot more money, and it’s going to take a long time for that to happen.”
Vulnerabilities in the U.S. Energy Sector
Hochstein also pointed out another critical issue. “There’s one other point, Kate, that you have to always think about when you get so tight, like in the United States, where we’re almost self-reliant, we’re not really – any one accident can take us off kilter,” he added. “Last week there was an accident at the Valero refinery in Texas that took out a significant part of the facility. Accidents like that will now hurt us and hurt our ability because we now don’t have the ability to import anything from the outside.”
