By Randall W. Forsyth
Oil-price spikes and auto strikes have taken large tolls on the U.S. economy in the past. But that history is unlikely to repeat now.
Global crude oil prices initially jumped more than 10% in trading Sunday evening in response to Saturday's drone attack on a Saudi Arabian oil facility, which hit half of Saudi's productive capacity. The kingdom claimed one-third of the lost output would be restored by Monday although that remains to be seen.
Away from energy, the market reaction Sunday evening was negative, as would be expected, with S&P 500 and Dow Jones Industrial Average futures off 0.3% and most Asian markets also trading lower. But the dollar and Treasuries were little changed, with no evident flight to quality to boost these traditional havens.
The weekend attacks revived memories of past Middle East conflicts that presaged jumps in energy prices, from the Yom Kippur War in 1973 to the Iranian revolution of 1979 to the Iraqi invasion of Kuwait in 1990. President Donald Trump implied Sunday the U.S. was ready to take military action, tweeting “we...are locked and loaded” after accusing Iran of being behind the attack on the Saudi oil facilities.
On the assumption that the impact is confined to the oil market, however, the effect on the economy of the U.S. and the rest of the world should be contained. Trump also tweeted he has authorized the release of oil from the Strategic Petroleum Reserve, which should forestall sharp price rises being felt by U.S. consumers. Read more.