History shows that oil peaks – not economic panic – are the main cause of recessions in modern America.
"Oil cooks have killed more US economic expansions over the past 40 years than any other single cause," wrote Nicholas Colas, co-founder of DataTrek Research, in a note to clients.
In addition to long lines at gas stations, the Saudi oil embargo from 1973-1974 contributed to averting an oil price rise that weakened the economy. The Iranian revolution in 1
Similarly, the US economy fell in a downturn after Iraq invaded Kuwait in 1990 and again after the United States overthrew the Iraqi dictator Saddam Hussein in 2003.
Historic seen, we have seen an increase in oil prices ahead of or coincide with a recession, says Mike Reynolds, investment strategy manager at Glenmede.
$ 140 oil in 2008
"It was the straw that really broke the camel's back for consumer spending," said Troy Gayeski, investment manager at SkyBridge Capital.
Oil jack is scary because at the same time they give a blow to household consumption and consumer confidence.
And higher oil prices can spread to other parts of the economy and increase the cost of everything from airfare to truck driving. It can put pressure on the profit margins as well as the Federal Reserve, which is responsible for ensuring that inflation does not get out of hand.
"The hiked bets in the worst possible time. It was a bad call," Gayeski said. "It would be very doubtful that the Fed would overreact."
Risk rises in the Middle East
The recovery from the great recession has proved to be resilient and overcome countless scary enemies such as Brexit, slowdown in the Chinese economy and the European debt crisis. Now the economy is under pressure from the trade war between the US and China.
"The risk of a military confrontation in the Middle East is rising sharply," wrote Helima Croft, worldwide trading strategy at RBC Capital Markets, in a note to clients on Wednesday. "There is growing concern that the region's prolonged cold war may be ready to become a hot one."
Slate to rescue
US oil prices have risen nearly 50% since coinciding with $ 42.53 per. Barrel late last year. But most of these gains took place before standoff over Iran. Prices have been stable in recent days as concerns about the Middle East were offset by the trade war.
"The United States is much more independent of energy than before" , Glenmedes Reynolds said.
SkyBridges Gayeski said he believes that the US economy could withstand Brent oil prices climbing over $ 100 to $ 110 a day. barrel.
"It's not the end of the world. We can't see it as a recession causing," he said.
However, above this level would be much more problematic.