Oil prices surge to two-week winning streak as Iran supply fears grip markets
Crude oil prices almost cracked $55 per barrel this week and remain near the lowest level in the past five years. On Tuesday, President Trump ordered a complete blockade on sanctioned oil tankers going to and from Venezuela. Four sanctioned oil tankers were reportedly diverted from Venezuela. On Truth Social, President Trump said, “Venezuela is completely surrounded by the largest Armada ever assembled in the History of South America,” and added, “It will only get bigger, and the shock to them will be like nothing they have ever seen before.” President Trump also wrote that the U.S. operation would continue until Venezuela returned “all of the Oil, Land, and other Assets that they previously stole from us.”
The Wall Street Journal has an excellent article entitled “Why Everyone Got Trump’s Tariffs Wrong.” This article featured lots of important charts, like surging tariff revenue, the price of imported goods, and surging GDP. The bottom line is the WSJ said, “Tariffs haven’t tanked the economy. In fact, GDP in the second quarter reached its strongest quarterly growth in nearly two years: a seasonally and inflation-adjusted annual rate of 3.8%. The third quarter is tracking close behind at around 3.5%.”
U.S. GDP growth is anticipated to exceed 5% in 2026 due to (1) continued onshoring, (2) a shrinking trade deficit, and (3) the fact that the Fed is expected to cut key interest rates further. If the U.S. economy is strong in 2026, the positive inflation and economic news bode well for the Republican chances in the mid-term elections. Since the mid-term elections are so important, President Trump is expected to be in “campaign mode” for the next several months by running around and striving to spread good news.
The bottom line is that under new Fed leadership, Kevin Hassett is expected to join Howard Lutnick, Scott Bessent, and President Trump and be another cheerleader for the U.S. economy. Most of the economic growth is currently tied to onshoring and data center growth, but it will spread as lower interest rates stimulate interest rate-sensitive parts of the U.S. economy, like the automotive and housing sectors.