The US-Israeli war in Iran has rattled global energy markets and raised concerns about rising oil prices. This comes as Tehran’s Islamic Revolutionary Guard Corps (IRGC) announced the closure of the Strait of Hormuz, an arterial corridor that transports nearly 20% of the world’s oil reserves. As tensions in the Middle East continue to roil the oil market, speculation is rife whether US President Donald Trump’s administration will change its military strategy.
According to a Politico report citing a US official, the Trump administration has not seriously considered changing its military strategy despite concerns over rising oil prices. Another added that the administration would need oil prices to remain stable for several weeks before considering any change in strategy.
How long can the U.S. wait for a sharp rise in oil prices?
The development comes as the Trump administration believes Washington can weather a brief spike in oil prices that could last up to four weeks before the political fallout causes damage. In addition, confidence in the Trump administration was boosted on Tuesday (local time) after oil prices fell to $80 a barrel, following a record high of $120 a barrel the previous day. The move further reinforced the administration’s view that these fluctuations are temporary and manageable.
Officials say the U.S. has three to four weeks to manage the situation before rising oil prices become a permanent political issue. The official said that assuming the economy continues to improve once the active phase of the war ends, the administration will have the entire summer (May to August) to take advantage of the recovery.
The Trump administration is trying to reassure traders
Instead of changing its strategy or course, the Trump administration spent much of Monday trying to reassure jittery investors who fear the devastating impact of a protracted war on oil supply chains. Officials have also sought to assuage concerns among Republicans who feel the Iran war is at odds with the message of accessibility they say the Grand Old Party (GOP) should push as it battles to retain control of Congress in November’s midterm elections.
Americans think the war will cause oil prices to rise
According to a recent Quinnipiac Poll, more than seven in 10 voters were very concerned or somewhat concerned that the war would cause oil and gas prices to rise in the United States. In addition, most voters oppose US military action, oppose the deployment of US ground troops in Iran and believe the conflict is unlikely to end quickly.
Trump: Oil price hike is a ‘short-term disruption’.
White House spokesman Taylor Rogers said the US president has consistently described the surge in oil and gas prices as a “short-term disruption”, adding that once military objectives are achieved and the Iranian regime is neutralized, oil and gas prices are expected to fall rapidly. Rogers also noted that these prices could even fall below pre-war levels, and that American families would benefit from this outcome.
Meanwhile, the White House is taking steps to manage oil prices, including considering easing sanctions on Russian oil, and continues to signal that the conflict will be short.
