The halting peace negotiations between the US and Iran need to result in a deal soon if the US is going to avoid deeper economic pain.<\/p>\n
That’s according to Moody’s top economist Mark Zandi, who said Donald Trump has about a week to secure a peace deal before the effects of the war make it more likely that the economy will fall into a recession. <\/p>\n
According to reports on Monday, Iran has said that it will cease negotiations and block the Strait of Hormuz until key demands are met. That’s bad news for Trump, who has teased a deal for weeks with nothing concrete to show for it. Oil spiked on Monday morning, with Brent and US crude prices rising by about 7%.<\/p>\n
Zandi said at the end of last week that the ongoing surge in oil prices<\/a> will have a more meaningful impact on consumers and the economy if they do not come back down in the next week. <\/p>\n The spike in crude has already pushed the US to the precipice of a recession<\/a> \u2014 and the hope is that a peace deal could cool oil prices enough to take the US from the critical threshold that could spark a downturn, Zandi said, speaking to Bloomberg on Friday.<\/p>\n “It’s gotta happen here very quickly, in the next day, two days, three days, next week or so,” he said on a potential peace deal with Iran. “Beyond that, I think we’ve got a real problem.”<\/p>\n Zandi pointed to America’s dwindling stockpiles of oil, with the nation’s Strategic Petroleum Reserve recently falling to 365 million barrels, the lowest stocks have been in about two years, according to the Energy Information Administration<\/a>.<\/p>\n Absent a deal with Iran, gas prices could soon rise to over $5 a barrel<\/a>, a key psychological threshold for consumers that could trigger a spending pullback and an economic downturn, Zandi said.<\/p>\n Crude prices rising over $125 a barrel would also be another critical marker that could suggest a recession is coming for the US economy, he suggested.<\/p>\n Meanwhile, the national average price for a gallon of regular gas clocked in $4.32 on Monday.<\/p>\n “We would get to that $5 a gallon,” Zandi said. “That would be, I think, enough to push the already tenuous economy into a recession.”<\/p>\n HFI Research, an energy research firm that recently called a “point of no return”<\/a> in oil markets, also suggested that Trump had a matter of days to avoid severe economic damage.<\/p>\n “Within hours, within days, Trump’s options and time are running out,” the firm wrote in a Substack post on Sunday. “By the end of June, if the Strait of Hormuz is still closed, global oil inventory operational minimum is guaranteed.”<\/p>\n