President Donald Trump’s war against Iran is drawing down U.S. oil reserves to an alarming degree, CNBC expert Steve Liesman told MS NOW’s Nicolle Wallace on “Deadline: White House” — and it puts the country in an extremely precarious position.
All of this comes as hostilities resume after weeks of a tentative and barely-enforced ceasefire that Trump’s allies had initially hoped was the start of a more lasting agreement.
“What is the economic impact for Americans of the Strait of Hormuz remaining either closed or controlled by Iran?” asked Wallace.
The simple answer, said Liesman, is that it’s “going to raise oil prices in general” and cause “tremendous geopolitical concerns” as Iran would be in a stronger position than before the war began.
“The other thing that’s happening right now is a couple of things,” said Liesman. “One is that Iran bombing and taking out some of the facilities and production in the Gulf, those have long-term implications. Those things, like those refineries, are very complex pieces of machinery and very complex factories. They don’t come back online immediately. So there’s going to be a long-term effect of this.”
But the other big issue, he said, is Trump taking oil out of the strategic petroleum reserve to prevent severe price spikes — something that Republicans roundly attacked former President Joe Biden for doing when he was trying to control inflation, and that comes with all the same risks.
The reserve, said Liesman, is “at the lowest level since 1983. And then, as a percentage of the oil we need, it’s at its lowest level. And God forbid, there should be something like a hurricane or something, and we need to draw down again. There’s an implication here for emergency situations that’s not apparent right now, but could be if we have a bad situation.”
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