Donald Trump still feels like a winner after capturing Nicolas Maduro. The easy capture of the Venezuelan president allowed him to control the country’s oil and mineral resources, but also to squeeze Cuba by denying it energy, raising hopes that he could topple the communist regime that has frustrated Washington since 1959.
Trump believes that his cooperation with Israel in Iran will have similar success. Iran’s missile and drone attacks on Israel and its Arab neighbors have not shaken his belief that he can win, no matter how he defines “win.”
Regardless of the war’s impact on energy markets, the U.S. economy can take a beating. “In the short term, oil prices, which will fall rapidly once the nuclear threats from Iran disappear, are a small cost for the security and peace of the United States and the world,” Trump said via social networks.
The fact that his unpredictable policy has so far not caused as much damage as expected gives him an additional sense of invincibility. Despite tariffs, cuts to the federal administration, deportations of workers and attacks on the Federal Reserve, economists were still considering a “soft landing” of the US economy after a period of high inflation until a few weeks ago.
America’s Resilience to Energy Shocks
The US is perhaps the best prepared of all developed countries for a spike in energy prices. Crude oil imports have been significantly reduced thanks to the growth of domestic production since the early 2000s, while the role of natural gas, which is less sensitive to global shocks, has increased.
Today, oil accounts for about 38 percent of US energy consumption, nearly ten percent less than during the 1973 oil crisis. At the same time, the share of natural gas increased from 30 percent to 36 percent.
While European markets have been rattled since Iran restricted passage through the Strait of Hormuz, the S&P 500, Trump’s favorite indicator of economic health, remains near record highs.
Adversity and public opposition
Still, Trump faces possible defeat, not militarily by Iranian forces, but by the opposition of the American public—the only force that can stop America’s war adventures.
The war against Iran has been unpopular from the start, which is unusual for a nation that often supports sending the military abroad. Its economic effects will further reduce the administration’s popularity.
Energy self-sufficiency cannot fully protect the US. The price of oil is determined by the global market, whether it comes from Texas or the Middle East. Gasoline prices have already hit their highest level since Trump took office, above $3.50 a gallon, and forecasts show they won’t return to 2025 levels until the fall of 2027
Fuel price hikes will affect transportation companies, farmers, retailers and the airline industry, which will also affect inflation, currently stabilized at 2.4 percent in February, and make it more difficult for the Federal Reserve to cut interest rates.
Trump’s strategy and risks
Trump is aware of the risks, which is why he is trying to lower oil prices through insurance for tankers, escorting through the strait, lifting sanctions on Russian oil and increasing production in Venezuela.
However, more than that is needed to reduce the biggest jump in oil prices in three decades. The war must end or the US must weaken Iran to the point where it can no longer threaten the tankers.
Trump believes he can achieve “unconditional surrender” from Tehran, but advisers should know that bombing does not guarantee long-term victory. Iran’s Revolutionary Guards and Basij will not simply surrender their weapons, and infrastructure may be destroyed, but there remain thousands of fighters on the ground ready to resist.
The options are limited: withdrawal of the surrender request, invasion by ground forces, or continued bombing, including civilian targets. Neither is quick, meaning the economic impact of the war is likely to linger. Trump may realize that, as easy as it was to capture Maduro, destroying the US’s adversaries is not a universal solution to winning the world, writes the British The Guardian.
(Vijesti.ba)
