'Approaching pandemic-level shortages': Stocks plunge as Iran renews Gulf attacks

0:00 Power Politics and for the first time in weeks,

0:03 investors are reigning in their optimism over the war in Iran.

0:06 The doubt plunged more than 550 points and oil prices climbed

0:10 after Iran launched a new wave of attacks across the Gulf region.

0:14 As we mentioned, according to the U .S.

0:16 military, Iran fired on American ships in the Strait of Hormuz,

0:19 but the missiles and drones were intercepted and no ships were hit.

0:23 The UAE also said that an Iranian attack caused

0:25 a fire in the largest oil storage area in the Emirates.

0:29 Meanwhile, here in the U s, the last California-bound oil tanker to pass through

0:33 the Strait of Hormuz has arrived in Long Beach

0:36 just in time for the average price for a gallon of gas to reach nearly $4 .50.

0:42 Back with us tonight, my dear friend and now colleague, Ron Insana,

0:46 MSNOW contributor and publisher of the message of the markets on Substack.

0:50 And Platon Siegel is back senior fellow for energy

0:52 security at the Center for Strategic and International Studies.

0:56 Okay, OK, RON, I'M JUST GOING TO SAY THIS IS PROBABLY THE MOST

0:59 NORMAL REACTION THE STOCK MARKET HAS SHOWN IN WEEKS GIVEN THE SITUATION IN IRAN.

1:04 WHAT'S YOUR TAKE?

1:06 WELL, I THINK THE, YOU KNOW,

1:07 THE RE-ACCELERATION MILITARY ACTION SHOCKED WALL STREET.

1:10 EVERYBODY THINKS, AS YOU SAID EARLIER IN THE PROGRAM,

1:12 THAT THIS IS JUST GOING TO BE DONE SOMETIME SOON BECAUSE

1:14 THEY'RE GETTING HINTS FROM THE WHITE HOUSE THAT EVERYTHING'S UNDER CONTROL,

1:17 THAT GAS PRICES ARE GOING TO COME DOWN,

1:18 THAT OIL IS GOING TO START FLOWING THROUGH THE STRAIGHT again.

1:21 And with this new military altercation between Iran and the UAE firing on U .S.

1:26 ships, that calls that entire line of reasoning, if you will, into question.

1:30 And so, as you also noted, with that last ship getting to port in Los Angeles,

1:35 we now have months to wait for oil to make it around the world because it takes

1:40 quite a long time for oil tankers to leave

1:42 the strait and get to their ultimate destination.

1:45 So yeah, this is there's finally a recognition that we're approaching, you know,

1:50 pandemic level shortages of certain goods, energy goods,

1:53 fertilizer, helium used to make computer chips.

1:56 Mark is kind of up to flat a little bit tonight, oil is down a couple bucks.

2:01 But I think the more we see these types of altercations,

2:05 the more the stock market's going to have

2:06 to deal with the fact that it's not over tomorrow.

2:09 Clayton, it might not feel like it, but this war has not hit the U s

2:13 nearly as hard economically as places like Europe and Asia.

2:17 Number one, could that change?

2:18 Could we feel it as hard?

2:20 Or could the problems they are facing start to spill over economically to us?

2:26 This is a global economy.

2:28 Hey, good evening.

2:29 Good to be with you.

2:30 Well, I think that it's inevitable that if we continue to have a loss

2:34 of about 13 million barrels per day from the closed Strait of Hormuz,

2:38 then eventually like a domino effect,

2:40 we're going to start to feel more and more of the pain.

2:44 And you mentioned the pump prices, which have increased to well more than

2:48 $4 a gallon on a nationwide average basis.

2:50 And I think that they're on their way

2:52 to five in the current direction of travel, unfortunately.

2:55 And so when people in Asia hear about this, the story

2:58 that was in the news today about the last oil

3:02 tanker reaching California before the Strait of Hormuz closed their attitude

3:06 is kind of like hey get in line because they were

3:10 facing that cutoff a few weeks ago that's the region

3:12 of the world that has the most acute shortage the united states

3:15 is exporting a lot of our crude oil a lot

3:18 of our refined products around the world to make up for shortfalls.

3:22 But what do you think is going to happen?

3:23 The price is here if that direction of travel continues.

3:26 I want to stay on that because we actually have the numbers.

3:29 The U .S.

3:30 has shipped more than 250 million barrels of DEMOCRATS,

3:34 WE ARE GOING TO TAKE A LOOK AT THE LAST NINE WEEKS TO FILL THE SUPPLY GAPS.

3:36 CAN WE KEEP THAT UP, RON?

3:39 I DOUBT IT.

3:40 WE'RE DRAWING DOWN 172 MILLION BARRELS FROM THE STRATEGIC

3:43 PETROLEUM RESERVE AS IT IS ALREADY PREVIOUSLY ANNOUNCED.

3:46 YES, WE CAN EXPORT MORE PRUDE OIL AND REFINED PRODUCTS,

3:49 BUT WE'VE DRAWN DOWN THE SPR AS IT'S KNOWN

3:53 TO SOMEWHERE BETWEEN 25 AND 30 PERCENT of its capacity.

3:56 And the other problem for us is not just can we do it,

4:00 but what happens if we do?

4:02 It keeps domestic prices higher than they

4:04 would otherwise be because demand for U .S.

4:06 crude oil is going up, not down.

4:08 So that means we pay more at the pump for gasoline.

4:11 It means we pay more for anything that we export outside the United States.

4:15 And so that adds more inflationary pressure to an economy that's

4:20 already seeing inflation well above the Fed's desired target of 2%.

4:24 Clayton, OPEC Plus announced yesterday that it would

4:28 increase output by 188 ,000 barrels per day.

4:32 And I know we say these numbers and all of us are eyes glaze over.

4:35 But all we really want to know is, will that help or is it too little, too late?

4:40 Big number.

4:40 Can it make a difference?

4:43 No, first of all, it's not a big number.

4:44 And what was before the war,

4:47 102 million barrel per day market, it's a drop in the bucket.

4:50 And most OPEC spare capacity is really not accessible.

4:55 Most of it lies in Saudi Arabia and Saudi Arabia

4:58 has managed to redirect some of its flows to bypass Ormuz.

5:01 But for the most part, that extra oil that's been pledged by OPEC and friends

5:05 is not going to make any difference to the market.

5:08 But I want everyone to focus on two things here.

5:11 The first one, as Ron correctly points out,

5:13 is we're drawing down our inventories, that's the first cushion that the oil

5:17 market has against future supply disruptions.

5:20 And that cushion is getting thinner and thinner every day

5:24 that we won a 13 million barrel per day loss.

5:27 And so we're moving to a cumulative loss of close to a billion barrels,

5:30 and that's going to take a long time to dig out of.

5:32 The other cushion that the oil market has

5:35 in the event of supply disruptions is OPEC spare capacity.

5:38 And it's upstream of Hormuz.

5:41 And now the United Arab Emirates, as of a few days ago,

5:44 is not probably going to be participating in the policy

5:47 of holding spare capacity by policy, by design.

5:50 So that means thinner cushions against future disruptions,

5:53 both on the inventory front and the spare capacity front.

5:57 All right.

5:58 But here's the thing.

5:59 High gas prices are just one of the things

6:02 adding to Americans' affordability concerns right now.

6:05 But I want to share this because you would not know any of this if

6:09 you listened to what the president's

6:10 remarks were about the economy earlier today.

6:12 Watch.

6:15 Thanks to these pro-growth policies,

6:16 our economy is roaring and factory construction is way up.

6:21 Consumer confidence is way up.

6:26 For fact's sake, the economy grew 2% in the last quarter.

6:30 That when it comes to the economy,

6:45 I just don't think this is something you can spin to the American people.

6:49 You cannot tell me my lived experience when I'm the one filling gas,

6:53 going to the grocery store, just dealing with life.

6:55 Yeah, and we know this from the prior administration.

6:58 I mean, you just can't, and listen, quite frankly,

7:00 the Biden administration's economy is stronger than

7:02 the economy we're dealing with right now.

7:04 We have 2% growth.

7:05 We've had zero job growth since April of 2025.

7:08 We've lost 75 ,000 manufacturing jobs.

7:11 Yes, the build-out of AI infrastructure is

7:14 propping up GDP by about three quarters

7:17 of the growth that we saw last quarter or the first quarter of this year.

7:20 And that is going on.

7:21 Consumer spending is reasonably healthy.

7:23 But this is not a runaway economy.

7:25 Consumer sentiment, as you said, is at the lowest level we've seen since 1957.

7:29 I mean, I'm loathe to quote Sherman Potter from MASH here,

7:33 but there's a lot of horse hockey being thrown around.

7:36 And, you know, IT'S JUST NOT TRUE WHEN PEOPLE ARE SAYING

7:40 THAT THE ECONOMY IS ON FIRE OR IT'S A GOLDEN AGE.

7:42 WE HAVE TARRIFF RATE-RELATED INFLATION, ENERGY-RELATED INFLATION,

7:45 GROCERY PRICES ARE UP, INSURANCE COSTS ARE UP,

7:48 HOUSING PRICES ARE STILL UP ENOUGH SO

7:51 IT IS UNAFFORDABLE FOR MANY FIRST-TIME BUYERS.

7:53 IT'S NOT QUITE THE ECONOMY BY ANY STRETCH

7:55 OF THE IMAGINATION BEING DESCRIBED BY THE WHITE HOUSE.

7:58 LISTEN, A .I.