Jennifer A. Dlouhy and Skylar Woodhouse
4 min read
(Bloomberg) -- President Donald Trump demanded that energy producers push down crude prices following US military strikes on Iran, amid fears that an escalating Middle East conflict and supply disruptions could extend the recent surge on oil markets.
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“EVERYONE, KEEP OIL PRICES DOWN. I’M WATCHING! YOU’RE PLAYING RIGHT INTO THE HANDS OF THE ENEMY. DON’T DO IT!” Trump posted Monday on social media.
In a subsequent post, Trump urged the Energy Department to “DRILL, BABY, DRILL!!! And I mean NOW!!!”
Energy Secretary Chris Wright responded in a post on X that “we’re on it.”
Iran has warned that Trump’s decision to join Israel’s military offensive with attacks on its three main nuclear sites would trigger retaliation. Tehran could close the Strait of Hormuz, a waterway at the mouth of the Persian Gulf that carries about a quarter of the world’s seaborne oil trade.
Although concern has focused on that chokepoint, any possible retaliation could affect other infrastructure key to the region’s oil processing and shipment.
Roughly 70% to 75% of the crude, condensate and refined products that come out of the Gulf flow through some nine facilities, which could be bottlenecks, said Colby Connelly, a senior fellow at the Middle East Institute.
GLOBAL REACT: US Bombs Iran, Next Move Is Tehran’s
Higher prices for oil — as well as the gasoline and jet fuel made from it — would squeeze US consumers whose bank accounts have been stretched in recent years by inflation, a development that could inflict political pain on Trump and Republicans.
If the strait is shut to shipping, crude could soar past $130 per barrel, according to a Bloomberg Economics estimate. White House Press Secretary Karoline Leavitt said earlier Monday that the US is “actively and closely monitoring this situation in the Strait of Hormuz and the Iranian regime would be foolish to make that decision.”
Global oil benchmarks are roughly 10% higher than they were immediately before Israel attacked Iran earlier this month. But Monday saw markets erase initial gains, as fears began to fade of an immediate disruption of supplies. Brent crude initially surged to $81.40 a barrel, but later dropped below $77.
Trump’s directive for more US drilling cannot, on its own, spur more oil and gas development.
US oil executives have shown little appetite in recent years to dramatically boost output, with the price of West Texas Intermediate at times falling below the cost of production at some sites.
