Economist Justin Wolfers argued that surging oil prices and bond market turmoil stemming from the ongoing conflict in the Middle East could result in a political risk ahead of the November midterm elections.
In Sunday’s post on X, Wolfer said, “As it becomes increasingly clear that the mess in the Middle East will continue through to the midterms, I can’t help but wonder when the Republican Congress will step in — to save their own jobs.”
Middle East Crisis
The Middle East crisis seems far from ending soon. In the latest development, President Donald Trump warned Iran of the stalled peace negotiations, stating that the “clock is ticking” and urging swift action or severe consequences.
The conflict, which began in February alongside Israel, has seen Trump consistently pressuring Iran to halt its nuclear enrichment activities. Trump recently described the ceasefire with Israel as being on “life support” after its extension last month.
Strait of Hormuz Closure Threatens
The ongoing closure of the Strait of Hormuz, which carries about 20% of global oil and liquid natural gas (LNG) shipments, has pushed oil prices higher, leading to inflationary conditions.
According to the latest report from the International Energy Agency (IEA), the key oil point removed more than 14 million barrels per day of crude output from global supply. The agency said that “More than ten weeks after the war in the Middle East began, mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace.”
Crude oil (June 2026) futures are hovering near $108 per barrel, while Brent oil (July 2026) futures are trading near $111 per barrel at the time of writing. Economist Peter Schiff warned that the current oil prices may not return to pre-Iran war levels anytime soon amid escalating tensions between Washington and Tehran.
The chaos has also driven bond yields higher. The 30-year Treasury yields climbed above 5.00%, while the 10-year yields are hovering above 4.50% level. Higher yields have ignited fears that elevated borrowing costs could result in both economic and political shocks.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.
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