This week, Gary Gensler and Simon Johnson discuss economic consequences of the intensified US-Iran conflict, including impact on the price of oil (and natural gas), how this feeds through to gasoline and other energy prices, the potential impact on financial markets (including private credit), and what may come next for sanctions – including sanctions applied to the export of Russian oil.
It’s entirely unclear (to us at least) how long the Strait of Hormuz will remain closed to tankers from countries aligned with the United States. But this is already a big oil price shock – and comparisons with what happened in the 1970s are not out of place. But we also need to think about ways in which the economy – in the US and globally – has changed over the past 50 years.
Below are some readings to which we refer, as well as suggestions if you want to dig deeper into particular points.
International Energy Agency: best one-stop source for the global picture is its Oil Market Report, most recently published on 12 March 2026. World Oil Production by Region is on p.21. For calendar year 2025, average world oil production was 100.4 barrels per day; “total supply” (includes processing gains and global biofuels) was 106.1. Projected totals for 2026 are very similar, up slightly.
U.S. Energy Information Administration: best way to track key variables for the U.S, including: gasoline and diesel prices, retail series; US imports and exports of petroleum. There are many other EIA series worth your attention as events develop.
As Gary mentioned, the potential impact on fertilizer is likely to be significant. See: American Farm Bureau, Middle East Tensions Raise Spring Planting Concerns, March 9, 2026.
The DROP Act (Decreasing Russian Oil Profits Act) of 2026, which has bipartisan support: Senate version; House version, good news coverage. Simon recommends following this legislation as the sanctions debate (for Russia and Iran) intensifies.
Gary mentioned a 1966 speech “The Arrogance of Power,” delivered on May 5, 1966 by Senator J. William Fulbright, Chair of the Senate Foreign Relations Committee, 1959-1975. Here are some relevant (and very interesting!) links. Biography of Senator Fulbright, from the University of Arkansas. On the speech itself, you can look at: original documents, or a complete printed version as reported by U.S. News and World Report, as released from the archives of the CIA (!), which includes a rebuttal by President Johnson and Secretary of State Rusk. Or you can download the book, which appeared very soon after the speech. (The link is to a version marked up by Hannah Arendt.)
Gary also recommends Philip Gordon’s book, Losing the Long Game: The False Promise of Regime Change in the Middle East, published October 2020. Or see this essay that appeared in Foreign Affairs, October 7, 2020: “The False Promise of Regime Change: Why Washington Keeps Failing in the Middle East.” From 2013-15, Gordon was Special Assistant to the President and White House Coordinator for the Middle East, North Africa, and the Gulf Region.
This episode was recorded in the morning of Friday, March 13, when the price of oil (Brent benchmark) was just over $100/barrel. The price of oil closed on Friday at just over $103. At the time of publishing this note, the Brent benchmark is hovering around $101-102.
