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Source: https://www.wsj.com/opinion/iran-war-will-lower-energy-prices-052c7302
Iran War Could Lower Energy Prices
(Wall Street Journal) Peter Navarro - President Trump's decision to confront Iran's nuclear program, stockpiles of ballistic missiles, and promotion of terrorism addresses an urgent national-security threat. It also tackles an overlooked problem: For more than four decades, Iran's rogue behavior has imposed a hidden tax. Call it the "Iran Terror Premium." When markets price crude oil, they must account for the risk that conflict, sabotage and terrorism will interrupt the seaborne oil trade. Iran creates that risk through its own forces and through proxy groups such as Hizbullah, Hamas, the Houthis and militias in Iraq, which have targeted energy infrastructure, shipping routes and regional oil facilities. The risk of disruption pushes prices higher. Market analysts commonly estimate that tensions involving Iran add roughly $5-15 a barrel to global oil prices under normal conditions. Even modest increases in price ripple through the global economy in the form of higher production costs. The burden of the Iran Terror Premium behaves like a parasite on the global economy - draining growth through slightly higher fuel prices, transportation costs and production expenses year after year. The world has tolerated this situation for decades. If Iran's threat to global energy markets is removed, the geopolitical risk premium should fall - leaving prices lower. The writer is White House senior counselor for trade and manufacturing.