Oil prices rose more than 10% late Sunday, highlighting the political risks of President Donald Trump’s military strike against Iran.
Main U.S. crude markets opened at $75 a barrel, the first trading activity since the U.S. and Israel attacked Iran on Saturday, killing people iran supreme leader Ayatollah Ali Khamenei and triggering retaliation Several oil tankers were attacked Crossing the Strait of Hormuz, more than 20% of the world’s waterborne crude oil passes through this strait.
Market analysts and geopolitical consultants warn that oil prices are likely to remain high and quickly drive down gasoline prices as long as hostilities around the Persian Gulf persist – just as cost concerns take center stage in the midterm primaries.
“Everyone involved in the war in the region knows that Trump’s Achilles heel is high oil prices,” said Michelle Brouhard, director of policy and geopolitical risk at commodities analytics firm Kpler.
Russian officials are also watching to see whether U.S. action could push up prices — which would be to their advantage. Kremlin envoy Kirill Dmitriev says: ‘Oil prices will soon reach over $100 a barrel’ Written on X Saturday. As oil prices rise, Republicans face a political reality: More Americans believe Democrats are the party most committed to lowering energy prices.
Trump administration shared a photo On Saturday, during the military strike, the White House Situation Room spoke on social media, including former oil executive and Energy Secretary Chris Wright, but otherwise dismissed the risk of an oil price shock.
“I’m not worried. I care about people’s lives. I care about the long-term health of this country, that’s all I care about,” Trump told reporters on Friday at an event in Texas to promote “American energy dominance” hours before the strike, when asked if he was worried about oil prices.
A speedy end to hostilities would vindicate this confidence. Gregory Brew, senior analyst at Eurasia Group, noted in an email that natural gas prices have risen in recent weeks as the possibility of conflict with Iran increases. He said he expected only a “transient” increase if the conflict ended within weeks.
“An easing of the situation will lead to a rapid decline in oil prices, as was the case last year [Israel’s war with Iran last] “Costs for U.S. consumers should fall significantly before the November midterm elections — unless, of course, this turns into a more permanent thing,” Blue said.
But Iran has retaliated, attacking oil tankers transiting the Strait of Hormuz. The trading company that charters the tanker is Suspension of water transport Because of the danger, ships choose to take longer and more expensive routes to avoid the area.
The risk of further oil market exuberance is real. Arab allies have warned the Trump administration in recent weeks that attacks on Iran’s leadership could lead to Iranian retaliation in the oil market, including attacks on oil fields and tankers in the strait, according to three people familiar with the matter.
White House and Energy Department spokespeople did not respond to questions about the administration’s plans to limit the impact of fighting in the Middle East on gasoline prices. But so far, former administration officials have expressed confidence that the White House has the matter under control.
Richard Goldberg, a former senior adviser to the White House’s National Energy Council and director of countering Iran’s weapons of mass destruction at the White House’s National Security Council, said U.S. warplanes have so far not targeted Iranian oil rigs or pipelines and that a strike on Iran’s navy should prevent it from laying mines in Hormuz — two things that should calm jittery nerves in markets.
“The oil market is always a planning consideration for the White House,” Goldberg said. “Wright coordinated very closely with his Saudi counterpart, and the president coordinated very closely with the Saudi president. [Saudi leader Mohammed bin Salman Al Saud] and others. Despite the risks and crises, we have many tools at our disposal to communicate with the market and predict the availability of supply. “
The U.S. government could also use sanctions licenses to “essentially seize Iran’s floating storage facilities for free,” he said.
Landon DeRentz, a national security and energy official during the Obama, Trump and Biden administrations, said Trump has always taken concerns about energy prices very seriously, but in this case he may have considered eliminating a nuclear-armed Iran more important.
“The affordability narrative must be at the center of discussions and decisions to achieve this goal,” said DeRentz, now the Atlantic Council’s vice president for energy and infrastructure. “But the importance of dealing with Iran’s nuclear issue is outweighing these concerns.”
De Renz said that in the short term, global crude oil reserves – including potentially the U.S. Strategic Petroleum Reserve – would be able to compensate for any major disruptions. U.S. oil companies are likely to increase production within six to nine months, especially if encouraged by high oil prices.
“Given the uncertainty of escalation, the next one to eight months are likely to be the most volatile period,” Drenz said. “Other than that, the underlying supply and demand fundamentals remain relatively stable.”
Trump does have some buffer against higher oil prices due to the boom in domestic oil production that began in the mid-2000s. Adjusted for inflation, oil prices are well below levels seen in decades, including during much of the 2003 U.S. war in Iraq. Unlike 20 years ago, the United States is now a major oil exporter, a fact that Trump has pointed out in recent speeches.
“I think the administration may have taken into account the extent of oversupply in the market right now and assumed that some level of substitution would improve prices,” said David Goldwyn, a former State Department official who focused on energy issues during the Obama administration. “In times like this, public diplomacy is crucial, most importantly signaling to markets that there will be a concerted effort to replace disrupted supplies. If they haven’t thought about this already, they should think about it now.”
Reporters Eli Stokols and Carlos Anchondo contributed to this report.
