Middle East conflicts shouldn’t derail the strong domestic growth story.
Rising Middle East tensions caused oil prices to briefly spike last week before reversing course on signs that further conflicts between Israel and Iran would likely be muted. Still, it was a stark reminder of how disruptions and turmoil in the area can quickly boost energy prices and spark fears of lower economic growth.
In that environment, it’s worth remembering an important fact: The U.S. today is more energy-independent than it’s been in 30-plus years.
According to the U.S. Energy Information Administration, the United States has been a net total energy exporter since 2019, with higher exports than imports.
- Our net imports of crude oil and other refined energy products are negative, at -2.1 million barrels per day (see the chart below).
- The U.S. currently accounts for approximately 16% of total global crude oil production—nearly double what it was just 15 years ago.
In short, we’re producing more energy domestically and importing less—reducing our overall dependence on the Middle East.
U.S. Department of Energy Crude Oil and Refined Products | Net Imports: 52-Week Moving Average
Source: U.S. Energy Information Administration, calculations by Horizon Investments, as of 04/22/2024
The upshot: While a larger escalation in the Middle East than what we’ve seen so far could certainly mean higher energy prices in the short term, we believe U.S. economic growth would be relatively unphased in the longer term due to our moving towards becoming an energy-independent nation.
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