Oil prices jumped more than 10 percent Sunday night, underscoring the political risks of President Donald Trump’s military strikes against Iran.
The main U.S. crude oil market opened at $75 per barrel in the first trading activity since the United States and Israel attacked Iran on Saturday, killingIran’s supreme leader Ayatollah Ali Khamenei and triggering retaliatory attacks on several oil tankers traversing the Strait of Hormuz, through which more than 20 percent of the world’s waterborne crude oil passes.
Market analysts and geopolitical consultants are warning prices could remain high so long as hostilities around the Persian Gulf continue and quickly trickle down to gasoline prices at the pump — just as cost concerns take center stage in mid-term primary races.
“Everyone in the region that’s participating in the war knows that the Achilles heel of Trump is high oil prices,” said Michelle Brouhard, head of policy and geopolitical risk for Kpler, a commodity analyst firm.
Russian officials are also watching whether U.S. actions will drive up prices — to their benefit . “$100+ oil per barrel soon,” Kremlin envoy Kirill Dmitriev wrote on X on Saturday. The uptick in oil prices comes as Republicans face a political reality that slightly more Americans think that Democrats are the party most committed to cutting energy prices.
The Trump administration shared a photo on social media Saturday of the White House situation room during the military strike that included Energy Secretary Chris Wright, a former oil executive, but beyond that has dismissed the risk of oil price shocks.
“I’m not concerned. I’m concerned about people’s lives. I’m concerned about long term health for this country, that’s what I’m concerned about,” Trump told reporters Friday at an event in Texas touting “American Energy Dominance,” held just hours ahead of the strikes, when asked if he was concerned about oil prices.
A quick end to hostilities would justify that confidence. Gregory Brew, a senior analyst at Eurasia Group, noted in an email that gas prices have already risen in recent weeks as the likelihood of an Iran conflict rose. He said he expected only a “short-lived” increase if the conflict ends within a few weeks.
“De-escalation will bring a rapid fall in oil prices, as was the case in [Israel’s war with Iran last] June,” Brew said. “The cost to American consumers should decline well ahead of November mid-terms — unless, of course, this turns into a more protracted affair.”
But Iran has already begun retaliating by striking oil tankers traversing the Strait of Hormuz. Trading firms that hire oil tankers are pausing shipments through the waterway given the danger, and vessels are opting to take longer — and more expensive — routes to avoid the area.
The risk of further inflaming oil markets is very real. Arab allies have warned the Trump administration in recent weeks that strikes aimed at Iranian leadership could lead Iran to retaliate in the oil markets, including by attacking oil fields and tankers in the Strait, according to three people familiar with the conversations.
White House and Energy Department spokespeople did not respond to questions about the administration’s plans to limit the effects the fighting in the Middle East will have on pump prices. But former administration officials have so far expressed trust that the White House has the matter in hand.
U.S. warplanes have so far not targeted Iran’s oil rigs or pipelines, and strikes against Iran’s navy should prevent it from placing mines in Hormuz — both things that should calm any jittery nerves in the market, said Richard Goldberg, the former senior counselor for the White House National Energy Dominance Council and director for countering Iranian weapons of mass destruction for the White House National Security Council.
“The oil market is always a planning consideration” for the White House, Goldberg said. “Wright coordinates incredibly closely with his Saudi counterpart, as does the president with [Saudi leader Mohammed bin Salman Al Saud] and others. We have many tools to communicate to the market and project the availability of supply despite risk and crisis.”
The administration could also use sanctions licenses to “essentially grab Iranian floating storage for free,” he said.
Landon Derentz, a former national security and energy official during the Obama, Trump and Biden administrations, said Trump has always weighed concerns around energy prices heavily, but in this case likely calculated that taking out a nuclear-armed Iran was more important.
“The affordability narrative must feature in discussions and decisions to do this,” said Derentz, who is now vice president for energy and infrastructure at the Atlantic Council. “But the weight of dealing with a nuclear Iran is surmounting those concerns.”
In the short term, global crude reserves — including potentially the U.S. Strategic Petroleum Reserve — will be able to make up for any major disruption, Derentz said. And U.S. oil companies can likely ramp up production within six to nine months, especially if incentivized by high prices.
“The next one to eight months could be the most volatile period given the uncertainty around escalation on the ground,” Derentz said. “Beyond that, underlying supply-demand fundamentals remain relatively stable.”
Trump does have some cushion for an oil price increase thanks to the boom in domestic oil production that started in the mid-2000s. Adjusting for inflation, the price of oil is far lower than it has been for decades, including through much of the U.S. war in Iraq in 2003. And unlike 20 years ago, the U.S. is now a major oil exporter, a fact Trump has consistently noted in his speeches recently.
“I think the administration may have considered how oversupplied the market is right now and assumed some level of substitution would ameliorate prices,” said David Goldwyn, a former State Department official focused on energy during the Obama administration. “Public diplomacy is essential at a time like this, and signaling to the market that there will be coordinated efforts to replace disrupted supply is at the top of the list. If they haven’t thought of that already, they should be considering it right now.”
Reporters Eli Stokols and Carlos Anchondo contributed to this report.
