- Strait of Hormuz may reopen within two months.
- Reopening to cause sharp decline in energy prices.
- Lower energy costs could reduce inflation and enable rate cuts.
Donald Trump’s economic adviser Kevin Hassett has said the Strait of Hormuz could reopen within the next two months, with oil supplies returning to normal levels amid hopes of reconciliation between the United States and Iran.
Hassett said reopening the key shipping route would lead to a sharp fall in energy prices.
“There’s going to be, you know, a rapid reduction in energy prices once we get the Strait open,” he told Fox Business Network.
He added that lower energy costs could have a broader economic impact.
“Once the energy prices start to come down, don’t forget that that will put downward pressure on inflation and…I think that the outlook for the Fed having the room to cut rates is going to be very solid.”
Sharp Drop In Vessel Traffic
Before the US-Iran war began on February 28, more than 100 commercial vessels, mostly oil tankers, passed through the strait each day, according to Kpler data.
That number has since dropped to single digits.
Despite a ceasefire announced on Tuesday, which Washington said was conditional on resumed flows, only nine ships have been observed passing through the strait since Thursday morning, five exiting the Persian Gulf and four entering.
Iran’s Grip Over Key Shipping Route
The limited movement of vessels highlights Iran’s control over the strategically vital waterway and its influence on global energy flows.
Trump Criticises Iran’s Actions
US President Donald Trump also weighed in on the situation, criticising Tehran’s handling of oil transit.
“Iran is doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz. That is not the agreement we have! You’ll see Oil start flowing, with or without the help of Iran and, to me, it makes no difference, either way,” Trump said in a Truth Social post on Thursday.
