Team,
Check out my interview with Rob Schmitt on Newsmax.
I discuss how the Iran Terror Premium, long priced into oil markets, has been raising global oil prices substantially for over 45 years.
The geopolitical risk associated with Iran’s terror has effectively increased the price of a barrel of oil by $5 to $15 above what market conditions would otherwise dictate, and this Iran Terror Premium has cost around $10 trillion of slower GDP growth over the course of more than four decades.
Neutralizing Iranian terror will get rid of the Iran Terror Premium, bringing oil prices back down to the 60-dollar range and even lower over time.
Please share this with a friend.
Peter
TRANSCRIPT
ROB SCHMITT: Peter Navarro is the Senior Counselor for Trade and Manufacturing at the White House. He’s with us now. I imagine that the economic side—on the economic side of this story, Peter, that that Strait [of Hormuz] has got to be the main concern, right?
DR. NAVARRO: Rob, I want to explain the Iran Terror Premium. When President Trump says that after this is over, we get the other side of it. Oil prices will not only go back down to the 60-dollar range, they’ll be lower over time. Karoline Leavitt said the same thing today. What they mean is this, Rob: for over 45 years, because of the geopolitical risk associated with Iran’s terror, with its terror through proxies like Hamas, Hezbollah, and the Houthis, what that has done, and there’s well-documented studies on this—is effectively raise the price of a barrel of oil, five to 15 dollars above what, otherwise, market conditions would dictate. From pure geopolitical risk associated with Iran.
SCHMITT: Right.
DR. NAVARRO: And it’s cost, over these 45 years, something like $10 trillion of slower GDP growth. So to neutralize the Iranian terror is to get rid of this Iran Terror Premium on oil, and it all hovers around this Strait of Hormuz and the accident of geography that gives us a terrorist state in Iran near that Strait of Hormuz. And that’s why the President is the first leader to recognize this. And it’s not just that there’s an imminent national security threat because of the ballistic missiles and the nukes that Iran has.
SCHMITT: Yeah.
DR. NAVARRO: It’s also this Iran Terror Premium that we can stop paying and the world will stop paying.
SCHMITT: There’s so many different reasons why this was the moment to do this, and the least of which is how many times this has been, as I said, a can that’s been kicked down the road. Nobody wanted to deal with this, and just because nobody else wanted to deal with it doesn’t mean that he’s wrong for taking it on. A lot of people that are upset that this war was brought on and think that it goes against his policies, I mean this was the right thing to do for a number of different reasons. You just enunciated another one of them. I want to talk real quick about, as far as domestic energy, because a lot of people say, why do we need—
DR. NAVARRO: Sure.
SCHMITT: —we always talk about being energy independent. Why does it matter? The Strait of Hormuz, the President announcing America First Refining is opening this new—in Brownsville, Texas—the first new US oil refinery in 50 years, 300-billion-dollar deal, saying the biggest in history, massive win for American workers, energy, and the great people of South Texas. Tell us about what this will do, and tell us why it matters what’s happening in the Strait of Hormuz if we have so much oil in the U.S.
DR. NAVARRO: So, it’s a beautiful thing, Rob, that Donald Trump’s policies, going back to the first term, have allowed us for the first time in decades to be energy independent, oil independent. But we’re in a world where we also trade with other countries, particularly in Asia. And Asia will bear a heavy brunt of this. Europe will bear a heavy brunt. They have been. And if we can solve the problem, it will help our global economy and us as the world kind of flows with all its trade. So, sure, we will and can be energy independent but, as usual, the Boss is playing three-dimensional chess and understands that basically having a good global oil market that isn’t subject to the Iran Terror Premium is really the key to global prosperity. Remember I told you, Rob, it’s 10 trillion dollars they’ve already extracted from the global economy in terms of gross domestic product drag. That’s got to stop.
SCHMITT: Yeah. I want to get to one final thing before I let you go. We had the jobs report last week. It was rather ugly for the month of February. And just to remind people, this was a month where half the country was frozen in ice and snow for about the first two or three weeks of that month. What happened last month? How do you explain that?
DR. NAVARRO: Yeah. Well, look, I noticed a pattern in the legacy media. They’re consistently misreading the actual reports. If they looked at that actual report, the numbers are totally driven by a healthcare strike in cold weather. And when you look at the average of jobs created over January and February, it’s exactly what we need for steady state unemployment rate to hold. And there was great news underneath that report, as we’ve seen in other reports, that the manufacturing sector is strong. We continually swap these private sector more productive higher wage jobs for government sector jobs. Wages are rising.
SCHMITT: Yeah.
DR. NAVARRO: So, it’s good that we can talk about this, because I want your viewers to understand that the fundamental underlying Trump economy is very strong. Inflation continues to fall at the core, and this is important conversations to have because the media gets it wrong, I think, because they want to get it wrong.
SCHMITT: Sure.
DR. NAVARRO: There’s just too much anti-Trump stuff going on.
SCHMITT: And you expect March will be a stronger month.
DR. NAVARRO: Yes. Look, January, the manufacturing index finally turned up above 50. We had two straight months of that. It takes time for the tariffs to bring in the manufacturing. Construction’s booming. It’s a fundamentally sound economy. I wish Congress would get their frigging act together and stop doing these shutdowns and things like that. We don’t need that, but, you know, it’s like—
SCHMITT: Got it. I get it.
DR. NAVARRO: You wish for things that you’re never going to get, right?
SCHMITT: Yeah, I hear you. Peter Navarro, good to see you. Thanks, buddy. Appreciate it.
DR. NAVARRO: Always a pleasure, Rob. Love talking economics with you, brother.
