Crude oil prices surged to more than $111 per barrel Thursday as conflict between the U.S. and Iran continues. If it rises to $150 per barrel, the U.S. could be in for a “nightmare scenario” according to Stephen Moore, a former advisor to President Donald Trump.
For some perspective, crude oil prices sat at around $70 in February, before the conflict in Iran began, according to MarketWatch.
Moore’s quote comes from a report in POLITICO this week as rising gas prices were stressing American consumers and reportedly making the Trump administration concerned. The outlet said that White House senior staff and administration officials have been discussing that $150 per barrel “nightmare scenario” as fighting in Iran drags on, citing a “person familiar with the conversations and two people close to the White House.”
Trump announced that the U.S. had joined Israel to attack Iran in late February, shortly after protests in the country, where a pro-U.S. government was toppled in 1979. Since Trump had campaigned on a platform that de-emphasized foreign war and promised to bring down prices, the choice to attack Iran has not been met favorably by the public.
Furthermore, while Trump has said that the conflict would last just a few weeks, it has now been going on for more than a month. U.S. servicemembers have died in the Middle East and as the Strait of Hormuz – a vital oil transportation route – remains blocked, gas prices shot up over $4 per gallon this Tuesday. Those prices continue to climb higher.
Beyond Moore’s $150-per-barrel “nightmare” scenario, the Democratic National Committee in a statement raised the alarm about prices potentially reaching $200 per barrel. According to the DNC, that could push prices at the pump towards $7 per gallon. With higher gas prices, other costs typically go up as well due to transportation costs.
“White House officials are looking at the economic effect of higher prices and considering ideas for bringing down those costs, including the deployment of additional emergency powers, according to two industry officials in contact with the White House, who, like others in this report, were granted anonymity to speak freely about private conversations,” POLTICO reported.
It said this planning does not mean the White House expects crude oil prices to hit record peaks. However, they also aren’t “ruling out the possibility of prices rising as high as $200 per barrel,” per the person familiar with internal discussions.
A White House official cited by POLITICO has denied that the administration is weighing the possibility of prices reaching $200 per barrel. Still, according to the outlet, U.S. Treasury officials do expect crude oil prices to remain above $100 per barrel for some time.
“All the economics team over there that I’ve talked to, they’re all aware of the negative effects of rising oil and gas prices,” Moore said. “It’s no big shocker that the president is now really focused on getting that down as quickly as possible.”
Experts cited by POLITICO warned that the real damage of the Strait of Hormuz being blocked likely hasn’t even been felt yet at the pump. Weeks’ worth of global oil were already headed to the market when the war started, but those ships have now mostly reached their destinations, the outlet explained. Now, there’s a real air pocket in the system, and Rory Johnston, an oil analyst who writes the newsletter “Commodity Context” said it is expected to hit the U.S. in about two weeks.
“The U.S. will handle the coming air pocket in the oil markets better than virtually any other country because of its role as a leading producer of oil and gas, he said,” per POLITICO’s report. “But there will still be a further jump in diesel prices, jet fuel, transportation costs and more, he said.”
Even so, he predicts that the coming weeks are going to be “really hard on consumers,” who have already been feeling squeezed by long-lingering inflation. He called the increased oil prices “effectively a massive tax that will sap excess disposable income,” that will be especially hard on poorer households.
In a Wednesday morning Truth Social post, Trump provided this update on the conflict in Iran: “Iran’s New Regime President, much less Radicalized and far more intelligent than his predecessors, has just asked the United States of America for a CEASEFIRE! We will consider when Hormuz Strait is open, free, and clear. Until then, we are blasting Iran into oblivion or, as they say, back to the Stone Ages!!!”
POLITICO reported Thursday that the president’s Wednesday night primetime address did little to sooth anxiety over rising prices. Members of his own party shared concerns with the outlet.
“Trump declared Wednesday night that the U.S. offensive in Iran is ‘nearing completion’ but warned that military operations would intensify over the ‘next two to three weeks,’” POLTICO said. “He attempted to clarify his goals for the war – to destroy Iran’s nuclear capabilities – and insisted it was never about regime change. And he shrugged off the spike in oil and gas prices as a ‘short-term increase.’”
In response, one GOP strategist reportedly said this in a text to POLITICO: “What the hell did he just say?”
“Conversations with more than half a dozen operatives and party chairs across seven battleground states revealed their anxiety that the prolonged conflict is overshadowing the White House’s affordability message and could hurt their chances of holding onto power this November,” during the midterm elections, POLTICO said.
Two different Republican strategists cited by the outlet compared Trump’s glowing comments about having “the strongest economy in history” with “no inflation” to former Democratic President Joe Biden.
“Not sure people will buy the strong economy part,” Todd Gillman, a Michigan GOP district chair, said Wednesday night, per POLITICO. “Inflation is definitely more under control than it was under Biden, but the prices haven’t come down on a lot of things.”
University of Massachusetts Amherst Poll results released Monday showed that Trump’s approval rating had fallen to 33% – the lowest rating of his second term. Other pollsters also noted the president’s rating slip, with many attributing it to the war in Iran. As far as the midterms are concerned, The New York Times reported this week that “recent polling on the congressional generic ballot shows Democrats with a modest advantage.”
