Oil prices will rise even higher regardless of whether the Iran war ends, U.S. economic and political commentator Peter Schiff predicted during an interview with Fox News Digital on Wednesday, noting that he expects an economic “downturn.”
Schiff, chief economist and global strategist of Euro Pacific Asset Management and host of “The Peter Schiff Show” podcast, described the elevated prices as “a tax on the economy,” opining, “I don’t think it’s over.”
“I think oil prices are headed significantly higher from here — not just oil, but everything related to, to energy,” he explained, “especially… diesel, which is gonna have a particularly harmful impact because that is the fuel… that is used in, in agriculture, it’s used in transportation, all the trucks are diesel,” he noted, adding that this will “affect the price of pretty much everything.”
The AAA national average price for diesel recently hit the highest recorded average price of $6.5276 as of Tuesday, but inched down to $6.5141 by Thursday.
While Americans have been facing elevated fuel prices amid the Iran war, Schiff also pointed to the Federal Reserve as part of the reason for the energy prices.
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“But the Fed’s monetary policy has been much too loose for much too long,” he said. “The quarter-point rate hike… last week is too little too late to really derail the inflation train. And I think you’re gonna see a lot of upward pressure on all prices” due to “Fed policy,” Schiff explained.Â
He also pointed out that the U.S. will eventually “have to stop selling” oil from its Strategic Petroleum Reserve (SPR).
“And I think the same thing is gonna happen with other countries that have been liquidating reserves in order to… artificially suppress prices,” he said, noting, “imagine what happens if we have to start replenishing those depleted reserves. That would put even more upward pressure on prices.”
The supply of crude oil in the U.S. SPR has fallen significantly this year from over 400 million barrels down to more than 284 million as of the most recent data posted by the U.S. Energy Information Administration.
“Look, I think the prices will be lower if we manage to get ourselves outta this war. How much lower it’s hard to say. Because I think even if we have some kinda deal to end the war, I don’t know that you could trust it,” he said. “I think that there’s gonna be a risk premium for many years now because you have no idea when the war would resume.”
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“Maybe we get some kind of deal, a ceasefire or something, but… we’ve seen these deals before and… they immediately blow up,” he noted.
Schiff said he believes “oil prices are going up regardless of the outcome of the war and whether we end it or not. It’s just that if the war continues, I think the prices will be higher than if it doesn’t continue,” he said, predicting that prices will increase “either way.”
President Donald Trump asserted in part of a Truth Social post last week, “The World’s Diesel price rise is mostly caused by the Russia/Ukraine War, not Iran.”
Schiff expects unemployment to rise and consumer spending to fall, speculating that the Fed may “not raise interest rates as much as they should to contain inflation. In fact, they may even end up cutting rates if the economy is weak enough.”
“If the Fed tries to stimulate the economy or fight rising unemployment by rate cuts or quantitative easing, that’s gonna fuel the fire that’s already burning in, in consumer prices,” energy included, he noted.
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Fox News Digital reached out to the White House on Thursday.
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