Fuel prices surged after the Trump administration launched strikes against Iran on Saturday, immediately raising questions about whether the war would increase energy costs for Americans, put more pressure on power grids, and push companies to pump out more oil and gas in the US. If conflict drags on, that could potentially play into Donald Trump’s plans to “drill, baby, drill” — but that doesn’t necessarily protect Americans from higher energy prices.
Keep in mind that it’s still too early to tell what kind of war the US may have sparked. The spike in global oil prices could be short-lived. But prolonged conflict and disruptions to oil and gas production in the Middle East could reshape the global flow of fossil fuels.
A longer military engagement has the potential to change forecasts for fossil fuel production in the US — already the world’s biggest oil and gas producer. It also risks inflaming a growing sore point for the Trump administration: rising costs for Americans as the nation’s energy demands grow.
“It’s an interesting balance to walk”
“It’s an interesting balance to walk because a higher oil price environment, which incentivizes increased oil production, fits within the ‘drill, baby, drill’ mantra, but it is also reflective of an environment where energy and particularly gasoline prices are likely more expensive,” says Reed Blakemore, director of research and programs at the Atlantic Council’s Global Energy Center.
“The balance of how the consequences of this war with Iran manifest in US energy affordability and US oil and gas production is a really important space to watch particularly as we [move] toward midterm elections in November,” Blakemore says. Soaring electricity costs, particularly amid the rush to build new, energy-hungry data centers, have already become a hot topic in local races across the US.
The international crude oil price was up 8 percent to about $84 a barrel by Tuesday, the highest it’s been since July 2024. It’s pushed up the price of gasoline 10 cents to an average of $3.11 a gallon in the US. The cost of liquefied natural gas (LNG), a more important fuel source for electricity and heating, climbed 45 percent in Asia and 30 percent in Europe.
Since the conflict broke out, all eyes have been on the Strait of Hormuz that borders Iran, the United Arab Emirates, and Oman, through which one-fifth of global petroleum consumption and LNG trade typically moves. That transport ground to a halt this week as the Iranian Revolutionary Guard reportedly threatened to fire on ships and shipping insurers changed or canceled policies. The Trump administration now says it’ll provide naval escorts and risk insurance for ships moving through the strait.
“How much of that oil can continue to flow out? That’s the question everyone’s asking now,” says Mohith Velamala, downstream oil and chemicals specialist at BloombergNEF.
Because the US already produces so much oil and gas, it’s more insulated than other countries that are more dependent on fossil fuels from Iran and its neighbors, including Qatar, where energy infrastructure has been targeted in attacks by Iran. If anything, higher oil prices could eventually encourage more oil and gas production in the US. That’s been a key priority for the Trump administration as part of the president’s obsession with “American energy dominance.”
... continue reading