By Steve Holland and Andrea Shalal
EVIAN-LES-BAINS, France, June 17 (Reuters) - U.S. President Donald Trump on Wednesday defended the U.S. deal with Iran at a G7 summit in France, saying a continued war in the Middle East could have caused an economic catastrophe.
"So the one thing I didn't want to see is, I didn't want to see economic catastrophe. If you kept this going, that could have happened," Trump told reporters in the lakeside resort of Evian-les-Bains.
The U.S. president said he did not want to be like Herbert Hoover, who was U.S. president in October 1929 when the stock market crashed, causing the loss of billions of dollars and triggering what became known as the Great Depression.
The war, which began with U.S. and Israeli strikes on Iran on February 28 and spiraled into a broader regional war, has sent energy prices up sharply, renewing inflationary pressures, dampening growth and sparking concerns about a major food supply crisis in developing countries.
The U.S. and Iran have signed a memorandum of understanding on ending the war, with a binding peace deal to be signed in coming days. A senior U.S. official on Wednesday said either side could walk away till the binding deal was in place.
Economists say the peace deal spells good news for the global economy, but warn of huge risks if the deal falls through and the conflict intensifies. They add that getting trade flows back to normal will also take months, if not longer, while fuel sector analysts and maritime experts say it could take a year for bunker fuel supplies to return to normal.
Trump told reporters that the deal would allow oil shipments to resume through the Strait of Hormuz, noting that world oil reserves were set to start running out in about four weeks, which could have caused serious "bedlam" in global markets.
"So, what this does, it allows the ships to go. If we, if we keep bombing, those ships won't be going, and you're talking about 500, 600, $700 million a day," Trump said. Also we run out of reserves at about four weeks."
The president referred to the issue several times during the news conference, noting that the war's impact on oil prices and the stock market had been less significant than some had feared, which he said proved the resilience of the U.S. economy.
"We had a disturbance, but I must say it was much less than anybody thought," he said, insisting the agreement would prevent Iran from developing a nuclear weapon. "The oil never went to $350 a barrel, it went to $115, $120."
He said he also thought the U.S. stock market could drop by 25% to 30% as a result of the war, but that instead it rose to levels higher than those before the conflict began.
Trump added that U.S. forces stopped short of bombing Iran's oil pipelines to avert even more significant economic impact, given Iran's role in supplying global markets.
"I didn't want to ruin the world market because they do a lot of money," he said. "It would have been the wrong thing to do, and it could have caused, and it could have caused an international depression."
(Reporting by Steve Holland; Additional reporting by Daphne Psaledakis and Andrea Shalal in Washington; editing by Michelle Nichols and Deepa Babington)
