Even before the weekend’s escalation, oil prices had risen 17% this year due to Trump’s recently ramped-up rhetoric against the Iranian regime. The Trump administration has also ratcheted up sanctions on Iran in recent months.
Speaking at the White House on Monday, Trump said the U.S. would continue to execute large scale strikes in Iran. The president added that he expected the conflict to continue on for weeks but it could become a prolonged battle.
“Whatever the time is, it’s OK,” Trump said. “Right from the beginning, we projected four to five weeks, but we have capability to go far longer than that. We’ll do it.”
Prices have already started rising at gas pumps nationwide, according to GasBuddy, a price-tracking service. The national average has risen 5 cents since Sunday to $2.99/gal., GasBuddy’s website showed. “I believe we may see it touch $3/gal later tonight as the jump in prices begins to show up at more stations,” said Patrick De Haan, an analyst for the website, posted on X.
Retail gas prices move about 2.5 cents for every $1 move in the price of crude oil, so even higher prices could be on the horizon for consumers who have been grappling with the high cost of living for the last few years.
“This right now will increase gas prices a little bit, and again, if it’s not prolonged it’s not going to be a major inflationary hit,” JPMorgan Chase CEO Jamie Dimon told CNBC on Monday. “If it went on for a long time, that would be different.”
While Iran’s oil production is estimated to be less than 5% of global output — most of which goes to China because of U.S. sanctions — it has major influence over the Strait of Hormuz, a critical passageway for more than 20% of the world’s daily oil demand.
A closure or restriction there can quickly rock the global oil market, and it would be among the worst-case scenarios for the oil market, longtime industry analyst Andy Lipow said Sunday.
Some analysts expect the global oil benchmark, known as Brent, to reach or exceed $100 a barrel if the conflict continues. That would be a jump of about $30 from last week. Liquefied natural gas prices in Europe jumped more than 30 percent, adding to Monday’s sharp gains.
Concerns about the Strait of Hormuz rose after an Iranian commander said Monday that ships attempting to transit the waterway would “certainly face a serious response from us.”
On Tuesday, President Trump said that the United States might have the Navy escort commercial ships through the Strait of Hormuz, though he didn’t offer details about which ships would get such protection.
On Monday, a state-owned energy company in Qatar, one of the world’s top natural gas exporters, suspended production of liquefied natural gas and similar products following military attacks on two of its sites.
If the Strait of Hormuz is closed, oil exports from Kuwait and other states on the Persian Gulf are also impacted. There are alternative export routes, using pipelines across the Saudi Arabian desert, but capacity is limited.
barrels per day to offset potential price risks. The group consists of eight countries: Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.
“The countries will continue to closely monitor and assess market conditions, and…reaffirmed the importance of adopting a cautious approach,” they said in a statement.
The statement did not mention the conflict with Iran. But a separate statement by the Russian Foreign Ministry did, warning that a halt to shipping in the Strait of Hormuz could “create a significant imbalance in global oil and gas markets.”
In fact, it’s an imbalance Russia could conceivably benefit from.
Low global oil prices and heavy sanctions on Russian oil , including a G7-imposed price cap, have hit hard. A report by the Center for Research on Energy and Clean Air (CREA) in February said Russian revenues from crude oil exports had dropped by 18 percent over the last year.
One of Russia’s main buyers is China. A fall in global oil supply could mean a welcome uptick in Chinese orders to make up for a shortfall from Iran or other Persian Gulf suppliers.
The idiots didn’t warn Americans in the region in advance, and now they’re telling them to leave after all of the commercial flights have been shut down.