Oil prices rose more than 10 percent Sunday night, underscoring the political risks of President Donald Trump’s military strikes on Iran.
The main US crude oil market opened at $75 a barrel in the first trading activity since the US and Israel attacked Iran on Saturday. religious leader of Iran Ayatollah Ali Khamenei and triggering retaliation attack on several oil tankers It passes through the Strait of Hormuz, through which more than 20 percent of the world’s waterborne crude oil passes.
Market analysts and geopolitical advisors warn that prices could remain high as long as hostilities around the Persian Gulf continue and gasoline prices at the pump fall precipitously; just as cost concerns come to the fore in the mid-term preliminary races.
“Anyone involved in the war in the region knows that Trump’s Achilles heel is high oil prices,” said Michelle Brouhard, head of policy and geopolitical risk at commodity analyst firm Kpler.
Russian officials are also watching to see whether U.S. actions will increase prices in their own interests. “Soon oil will be above $100 per barrel,” Kremlin envoy Kirill Dmitriev said X wrote on Saturday. The rise in oil prices comes as Republicans face a bit of political reality. More Americans think Democrats are the party most committed to lowering energy prices.
Trump administration shared a photo Social media on Saturday also featured Energy Secretary Chris Wright, a former oil executive, in the White House situation room at the time of the military offensive, but beyond that he downplayed the risk of a shock to oil prices.
“I’m not worried. I’m worried about people’s lives. I’m worried about the long-term health of this country, that’s my concern,” Trump told reporters at the “American Energy Domination” event held in Texas on Friday, a few hours before the strikes, when asked if he was worried about oil prices.
A quick end to hostilities will justify this confidence. Gregory Brew, a senior analyst at Eurasia Group, said in an email that gas prices have already increased in recent weeks as the possibility of a conflict in Iran increases. He said he expected only a “short-term” increase if the fighting ended within a few weeks.
“The decrease in tension will lead to a rapid decline in oil prices as before.” [Israel’s war with Iran last] “By June,” Brew said, “the cost to American consumers will be considerably lower ahead of the November mid-term period – unless this becomes a more protracted issue.”
However, Iran has already begun to retaliate by hitting oil tankers passing through the Strait of Hormuz. Commercial companies that rent oil tankers Suspension of shipments via waterways Given the danger, ships are choosing longer and more expensive routes to avoid the area.
The risk that oil markets will flare up further is very real. Arab allies have warned the Trump administration in recent weeks that attacks targeting Iranian leadership could lead Iran to retaliate in oil markets, including attacking oil fields and tankers in the Bosphorus, according to three people familiar with the talks.
White House and Energy Department spokespeople did not respond to questions about the administration’s plans to limit the effects of conflicts in the Middle East on pump prices. But former administration officials have so far expressed confidence that the issue will be handled in the White House.
Richard Goldberg, former senior adviser to the White House National Energy Dominance Council and director of countering Iran’s weapons of mass destruction on the White House National Security Council, said U.S. warplanes have so far not targeted Iran’s oil platforms or pipelines, and strikes on Iran’s navy should prevent it from planting mines in Hormuz, both of which should calm jittery nerves in the market.
“The oil market is always a matter of planning for the White House,” Goldberg said. “Wright works in incredibly close coordination with his Saudi counterpart, as does the president. [Saudi leader Mohammed bin Salman Al Saud] et al. “We have many tools to communicate with the market and predict the availability of supply despite risk and crisis.”
The administration has also said it could use sanctions licenses to “seize Iran’s floating storage area essentially for free.”
Landon Derentz, a former national security and energy official during the Obama, Trump and Biden administrations, said Trump has always weighed concerns about energy prices heavily, but in this case he probably calculated that eliminating a nuclear-armed Iran was more important.
“To do this, the affordability narrative needs to be present in the discussions and decisions that are made,” said Derentz, who is now vice president for energy and infrastructure at the Atlantic Council. “But the gravity of dealing with a nuclear Iran overwhelms these concerns.”
In the short term, global crude reserves, potentially including the U.S. Strategic Petroleum Reserve, could offset any major cuts, Derentz said. And U.S. oil companies could likely ramp up production within six to nine months, especially spurred by higher prices.
“Given the uncertainty around the escalation on the ground, the next one to eight months could be the most volatile,” Derentz said. “Beyond that, underlying supply-demand fundamentals remain relatively stable.”
Trump has some support against the rise in oil prices, thanks to the boom in domestic oil production that began in the mid-2000s. When adjusted for inflation, the price of oil is much lower than it has been in decades, including before the U.S. war in Iraq in 2003. And unlike 20 years ago, the United States is now a major oil exporter; This is a fact that Trump has repeatedly stated in his recent speeches.
“I think the administration may have taken into account how oversupplied the market is right now and assumed that some substitution would improve prices,” said David Goldwyn, a former State Department official who focused on energy during the Obama administration. “Public diplomacy is vital at a time like this, and signaling to the market that coordinated efforts will be made to replace disrupted supply is at the top of the list. If they haven’t thought about it yet, they should do so now.”
Reporters Eli Stokols and Carlos Anchondo contributed to this report.
