Kevin Hassett, the White House National Economic Council director, told CNBC’s Squawk Box this morning that the recent calm in oil markets is a ledge, not a landing. With crude trading under $70 per barrel and a US-Iran ceasefire holding, his argument is that the actual flood of supply has not arrived yet. When it does, prices fall again.
That is a forecast, not a fact. But the framing matters because it shapes how the administration is talking to the Federal Reserve, to consumers staring at gas pumps, and to investors trying to figure out whether the spring oil spike was a one-off or a warning shot.
The mechanism Hassett described
Hassett told CNBC that pipelines in Saudi Arabia and the UAE were operating below capacity during the conflict and will ramp back up, and that tanker traffic through the Strait of Hormuz will normalize. “The straits are going to be open. Iran is not going to have a nuclear weapon, and the global oil market is going to be safer. And there’s going to be more oil than you’ve ever seen before,” he said.
His specific benchmark for “normal” is shipping volume. “Once traffic is really moving, we go back to more than 100 ships a day. Then you’re going to see prices come down from there because there’s going to be so much oil pouring out,” Hassett told CNBC.
The price data supports this view. WTI crude closed at $78.94 per barrel on June 22, 2026, down $21.41, or 21.3%, over the prior month from a May 18 peak of $112.25. Retail gasoline has followed, with the national average at $3.91 per gallon as of June 22, down from a May 11 high of $4.50. Six straight weeks of declines at the pump tends to outrun policy debate.
What it means for inflation and the Fed
Hassett separated the inflation question from the oil question. “When you have an oil shock, the one thing we know is that top line inflation moves way more than core. But the core does move a little bit,” he said on CNBC.
Headline CPI sits at 334.0 as of May 2026, with a 90.9 percentile rank against the trailing year, while core PCE, the Fed’s preferred gauge, has crept up more steadily from 126.121 in June 2025 to 130.082 in May 2026. The energy-driven spike that scared markets in April and May did not translate into a matching jump in underlying inflation.
That opening lets Hassett argue against overtightening. “I think that this is a Fed more than any I’ve ever seen, that is least likely to make such a mistake,” he said. The Fed funds upper bound has held at 3.75% since December 11, 2025, after three 25-basis-point cuts from the 4.5% level a year ago. Six months of holding suggests a policy committee that already considers itself close to neutral.
The AI productivity argument and the jobs report
Hassett’s third claim is most relevant to equity investors. “When you get lots of growth from a supply side boom, which is what we’re seeing, we’re seeing a productivity boom from AI, then that’s actually deflationary,” he told CNBC.
Wall Street strategists are partly in his camp. Vanguard’s 2026 outlook argues that on the back of AI capital investment and a potential productivity surge, the U.S. economy could eventually grow by 3%, though it also warns that solid growth and still-sticky inflation will leave the Fed with limited room to cut below a 3.5% neutral rate estimate. JPMorgan’s view is that CPI inflation peaks below 4% year-over-year and falls to 2% by the end of 2026, partly thanks to lower oil prices.
Hassett also pointed to the jobs report scheduled for Thursday after Independence Day, where the administration expects strong numbers. The trailing data is already firm. Nonfarm payrolls hit 159,001 thousand in May 2026, the highest reading in the series and up from 158,498 thousand a year earlier. Backing details are available in the BLS release on the Current Employment Statistics page.
What investors should actually take from this
There is a counterweight worth holding in mind. University of Michigan consumer sentiment sits at 44.8 in May 2026, down from 61.8 in July 2025 and well into territory the index itself flags as recessionary. Households are not behaving as if a deflationary supply boom is already in their grocery carts.
Hassett’s three claims function as a chain. The Strait reopens, supply surges, oil falls further. Headline inflation cools faster than core. The Fed, having already cut 75 basis points over 12 months, declines to overreact in either direction. If any link breaks, particularly the supply-surge premise, the inflation glide path gets bumpier and the policy debate restarts. Watch the tanker counts and the Thursday payroll report to see whether the map matches the terrain.
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