Trump Will Feel the Iran Oil Price Shock, Industry Analysts Say

Less than two weeks ago, President Donald Trump bragged about low gas prices in his State of the Union address. On Sunday, Trump called expensive gas “a very small price to pay,” as the U.S. wages war in Iran without an obvious end in sight.

Gas prices are currently up 56 cents a gallon on average since Trump’s address. The average price of a gallon could reach $4 by the end of the week if the market continues to panic.

The global oil shock is expected to worsen every day that the Strait of Hormuz — a vital passageway for 20% of the world’s oil — remains closed to most tankers.

Industry experts are increasingly concerned that the Trump administration did not adequately plan for the oil price shocks that are now rippling through the global economy, and they predict the White House will face serious political consequences because of it.

“His economic strategy is lower energy prices for inflation and for manufacturing, and in general to cater to the American people. All of those strategies are counter to this campaign,” Michelle Brouhard, the head of policy and geopolitical risk at Kpler, said on a Monday briefing call with the company’s clients. “We are going to have higher prices for inflation, higher energy prices for manufacturing. This is very very expensive for the American public.”

There’s very little that the Trump administration can do to control gasoline prices without reopening the Strait of Hormuz for oil tanker traffic, analysts warn.

While the Strategic Petroleum Reserve exists precisely for situations like this — providing a backup supply of oil in case of market shocks — analyst opinions are mixed about whether a release would be enough to ease market panic.

Rose Kelanic, the director of the Middle East program at Defense Priorities, said she was optimistic that a coordinated release of SPRs around the world, led by the U.S. and including all of the G7 countries, could be effective at temporarily easing panic.

The analysts on the Kpler call Monday morning were less hopeful, repeatedly pointing out that even with global SPR releases, supply will remain constrained until the Strait of Hormuz reopens for tanker traffic.

On Monday, the G7 countries decided to hold off on releasing any oil from the world’s SPRs for now. It’s not clear why that decision was made. The group may believe that an SPR release would be more effective if the situation becomes more dire.

“It also could be that, politically, it would look bad, because it suggests that there’s going to be a longer war, and they don’t want to admit it’s a longer war,” Kelanic said.

The political problem is becoming increasingly apparent.

The Trump administration has attempted to ease concerns by arguing that the price spike is just a market problem. Energy Secretary Chris Wright called it a “fear premium,” and said it didn’t have to do anything with supply. Republicans have largely echoed the message that it won’t be a long-term problem.

“I am concerned that average gasoline prices are well above where they should be,” said Gabriella Hoffman, an energy and media strategist. But Hoffman believes that prices will quickly taper off as the conflict in Iran eases — and she’s encouraged that prices still have not reached the levels they hit during the beginning of Russia’s invasion of Ukraine in 2022, when they rose above $4 a gallon.

Democrats say they have a much more straightforward message.

“Closing the Strait of Hormuz is a pretty one-to-one ratio between Trump’s policies and your bill filling up your tank. It doesn’t take a lot for people to make that connection,” said Democratic strategist Jared Leopold. “And even if gas prices stabilize, the chaos that was caused here builds on an overall narrative that Trump doesn’t give a damn about affordability and is just going to do whatever the hell he wants.”

Hoffman doesn’t think Democrats will benefit from focusing on gas prices.

“Oftentimes, a lot of people on the left, especially those who do policy, on the opposite side, they’re using this as an opportunity to push 100% transition to renewables, which has not worked,” she said.

Senate Minority Leader Chuck Schumer called on Trump to release crude from the reserves on Sunday.

The White House did not immediately respond to a request for comment.

The U.S. economy relies more heavily on oil than other major powers like Russia and China, analysts said. As a result, U.S. consumers feel oil price spikes more quickly and seriously than consumers elsewhere.

“That’s the worst thing ever for Trump. The U.S. is so unique in that everybody drives, and every three miles you see this billboard at the gas station that tells you what the price at the pump is,” said oil analyst Matt Smith during the Kpler briefing on Monday.

While prices continue to rise, there’s one American industry reaping unexpected benefits from skyrocketing oil prices: oil and gas companies.

“These prices right now, for them it’s an absolute dream,” Smith said.

Democrats say that only reinforces their message.

“This builds on a sense that somebody else is getting rich under Trump’s economy at the same time that people are struggling to get by,” Leopold said. “This may be a dream for oil companies, but it’s a nightmare for American consumers.”