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Energy Markets Doubt Trump's Iran War Endgame as Oil Prices Climb

President Trump's repeated claims that the Iran war is ending have been met with growing skepticism from energy markets due to ongoing conflict and the prolonged closure of the Strait of Hormuz. Oil prices have surged over 11%, potentially raising US gas prices above $4 per gallon, with analysts predicting sustained high prices above $90 per barrel. The economic impact is global, affecting everything from consumer goods to inflation, and has prompted Trump allies to pressure for a swift war conclusion. Market credibility in Trump's rhetoric has eroded, with experts emphasizing that pre-war price levels are unlikely to return soon, regardless of US military actions.

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Energy Markets Doubt Trump's Iran War Endgame as Oil Prices Climb

Energy markets are increasingly disregarding President Trump's assertions that the Iran war is nearing its end, as the conflict persists and the Strait of Hormuz remains closed, driving oil prices up and raising economic concerns.

Market Skepticism Intensifies

  • President Trump has repeatedly claimed the war with Iran is almost over to calm surging oil prices, but fighting continues with no plan to reopen the Strait of Hormuz.
  • Traders and analysts say his attempts to jawbone markets have cost him credibility, as his statements conflict with on-ground realities.
  • Gregory Brew, senior analyst at Eurasia Group, noted: "He’s continuing the war and the Iranians aren’t buying it," leading markets to ignore his optimism.

Economic Impact of Hormuz Closure

  • Iran’s closure of the Strait of Hormuz for over a month has caused a massive economic shock, with oil prices surging more than 11%.
  • This could push US gas prices beyond $4 per gallon, increasing costs for goods like fertilizer, flights, and plastics.
  • Key Middle East production facilities cut output to avoid oil pileups and will take months to ramp up once the strait reopens.
  • Rory Johnston, oil market researcher, estimates the conflict has removed about half a billion barrels of oil from the system.

Political Pressure and Industry Response

  • Trump allies, concerned about political risks ahead of midterms, are urging him to end the war quickly to address economic drag.
  • Despite White House claims that gas prices will plummet post-war, administration officials have privately sought new oil sources from industry, with limited success.
  • Stephen Moore, former Trump economic adviser, stated the war is having a negative effect on the US economy and must end swiftly.

Future Oil Price Projections

  • Experts project oil prices will remain above $90 per barrel long-term, regardless of US withdrawal timing, due to irreversible supply damage.
  • If Trump exits without reopening the strait, Iran could control one-fifth of global oil supply, charging tolls and influencing shipments.
  • Escalation, such as bombing Iran’s energy infrastructure, could worsen shortages and push prices to unprecedented highs.
  • Mark Zandi of Moody’s Analytics warned: "I don’t think there’s any going back to pre-war gas prices, at least not this year and probably not for a couple years."
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