The cost of crude oil surged past $100 per barrel on Sunday, marking the first time since Russia’s 2022 invasion of Ukraine.
Former President Donald Trump took to social media to describe the rise in oil prices as a “very low price.”
“Short-term oil prices, which will drop quickly once the nuclear threat from Iran is eliminated, are a very small price for the USA, as well as for global security and peace. ONLY FOOLS THINK OTHERWISE!” Trump posted on Truth Social on Sunday.
Oil and gasoline futures skyrocketed amid trader anxiety that the conflict in Iran could lead to prolonged disruptions in worldwide oil supply—especially given the war has spread across the Middle East, including assaults on refineries near oil-rich areas.
Iran has issued threats to target any oil tanker traversing the Strait of Hormuz, a critical chokepoint through which 20% of global oil passes.
U.S. oil futures ascended by 18% to approximately $108 per barrel, reaching their highest point since July 19, 2022. American crude briefly hit $110 a barrel on Sunday evening.
Brent futures, the global benchmark, climbed 16%, nearing $108 a barrel.
Oil prices could escalate to $150 per barrel by the end of March if transit through the Strait doesn’t resume, noted Homayoun Falakshahi, Kpler’s lead oil research analyst.
The recent sharp spike in oil prices significantly impacted stock markets, as investors fret that sustained high fuel costs might ignite renewed inflationary pressure and damage the economy. Dow futures plummeted over 800 points, or 1.7%. S&P 500 and Nasdaq futures also saw declines of 1.6%.
Triggered by the shock of initial strikes in Iran on February 28th, the average price for gasoline in America reached $3.45 per gallon on Sunday, which is 16% higher than the previous week, according to AAA data.
Enduring increases in oil and gas costs could compound America’s affordability struggles, putting President Trump and Republicans in a precarious political position ahead of this year’s midterm elections.
Attempts to Stabilize Prices
The Trump Administration sought to assuage concerns on Sunday that the U.S.- and Israeli-led military campaign against Iran would have lasting consequences at the gas pump.
The Administration unveiled a strategy to provide insurance coverage for oil tankers maneuvering through the Strait, following declarations by maritime insurers that they would withhold coverage for vessels in the area should an attack occur. The White House also indicated it would work to secure naval escorts for ships, though a tangible plan is still under development, and shipping companies signaled reluctance to navigate the region while the conflict persists.
“Our shipping experts suggest the Administration’s plan might help, but it is insufficient on its own,” Falakshahi commented. “I believe the market will only settle down if there is a significant de-escalation right now.”
A senior Iranian official warned Sunday that the conflict had entered a “new phase” following Israeli strikes on Iranian oil storage facilities. The official indicated that Iran might retaliate against the region’s energy infrastructure in the coming days.
“Iran will not surrender control of the Strait of Hormuz until it achieves its desired outcomes,” the official stated.
This situation has provided oil producers with increased capacity for storing the crude they pump. Consequently, many oil producers are scaling back output.
On CNN’s “State of the Union,” Energy Secretary Chris Wright affirmed that the U.S. has no intention of striking Iran’s oil industry or other energy infrastructure sites. However, Iranian oil faces severe sanctions, with China remaining its sole major purchaser.
About the Author
