On Face the Nation, on timeline, impact:

HASSETT: …look at futures markets, which are interesting because you’ve cited over and over the spot price of gasoline, which, of course, is affected right now by the disruption of the strait, but if you look at the futures prices, they are expecting a rapid, rapid end to the situation and much, much lower prices. In fact, I don’t think I’ve seen a sort of future price path with such a steep decline in all my years watching futures.

…

HASSETT: Well, first of all, you have to understand that America is not going to have its economy harmed by what the Iranians are doing. The bottom line is that in the ’70s we didn’t produce much oil, but now we do. So America is in a very strong position. They think that they’re going to harm the U.S. economy and get President Trump to back down. There couldn’t be anything that was a stupider thing to say because the bottom line is that our economy has got all this momentum in the world and we’ve got lots and lots of oil.

So, unlike in the 1970’s, there’s not a large terms of trade effect (we import and export oil and oil products). But apparently in Hassett’s mind, there is no cost-push inflation effect, because the disruption of 20% of world oil trade will be temporary.

I’ll just note at this point that, in addition to this assessment being at variance with investment bank economics department assessments, the 5 year inflation breakeven has risen about 0.22 percentage points since the outbreak of the war as of today.

Figure 1: 5 year Treasury-TIPS spread / inflation breakeven (blue), DKW estimated 5 year inflation (red), both in %. 3/16 observation at noon CT. Source: Treasury via FRED, Federal Reserve Board, Bloomberg.

From the prediction markets, Polymarket has the odds of the Strait opening by end-April at 31%.

In other words, the threatened deployment of a CRG to the region has not materially altered the odds. I will observe that I do not see how, for instance, seizing Kharg Island and its oil processing facilities would increase the chances that tankers and cargo ships will be able to transit the Strait (although Robin Brooks has argued that depriving Iran of oil exports by the US blockading Strait would induce Iran to relent; whether seizure and possible damage to the oil facilities on Kharg Island would result in the same outcome is up in the air).

(On the forecasting record, Dr. Hassett predicted zero daily fatalities due to Covid-19 by mid-May 2020).