Global Macro Service > Research Briefings > United States

Iran sanctions could spoil US fiscal boost

The US decision to reinstate “the highest level of economic sanctions” on Iran will lead to gradually and modestly reduced oil production by the world’s fifth largest producer. In an environment of increased global supply tightness, this will put further upward pressure on oil prices. If WTI crude oil price average $70 per barrel this year, the US economy could suffer a drag worth half of the 0.7ppt fiscal stimulus boost from the Tax Cuts and Jobs Act and Bipartisan Budget Act. Stronger energy investment would provide an offset, but elevated shale oil productivity would limit the upside.

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