US President Donald Trump has long boasted about keeping gasoline prices low in the United States during his tenure. Last month, during his State of the Union address, he highlighted falling petrol prices as a sign of the country’s economic strength.
That stance now appears to be shifting. Earlier this week, Trump struck a more positive tone on rising oil prices, saying the United States was making “a lot of money” as a result.
On February 28, the US and Israel launched strikes against Iran, triggering a conflict that soon spilled over into the wider Middle East. Since then, global oil markets have witnessed a sharp rise in crude oil and petrol prices, which recently even went up to $120 a barrel before easing to just a little over $100.
As energy costs continue to rise, the US President has presented higher oil prices as beneficial for the United States rather than a concern. The change in tone comes as the administration struggles to provide a clear plan for reopening the Strait of Hormuz, a critical maritime corridor where tankers carrying oil and natural gas have been unable to move freely.
“The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money,” Trump said on his social media platform.
Only a month ago, during his State of the Union address, Trump had pointed to petrol prices of $2.30 per gallon as a sign of economic strength. Since then, the average price across the country has jumped more than 50 per cent to $3.60 per gallon, according to AAA.
The shift highlights the tension between domestic political considerations and the administration’s international strategy. It also comes as the president’s party prepares for the November midterm elections. Trump has previously argued that rising petrol prices played a role in his victory over former president Joe Biden. Despite the recent spike, he told reporters on Saturday that he was not worried about the political impact of higher fuel costs or the possibility that they might increase pressure to end the conflict early.
Financial analysts have warned the surge in oil prices could have wider economic consequences. Goldman Sachs said on Thursday that based on its projections and historical patterns, higher oil prices would likely push inflation higher, slow economic growth and lead to an increase in unemployment by the end of the year.
Oil markets have been volatile as uncertainty continues over the security of the Strait of Hormuz. Many tankers have avoided the route, contributing to sharp price movements. On Thursday, global benchmark crude rose to $100 per barrel.
Analysts at Oxford Economics said the volatility is likely to continue as there is no clear indication of when the conflict might ease or when shipping activity in the strait could resume.
“The swings in Brent crude oil prices over the past several days are eye-catching and odds are volatility will remain because of the absence of a timeline for when the conflict will deescalate and when the Strait of Hormuz, which is effectively closed, will see traffic begin to recover,” the consultancy said in a note as cited by AP.
Meanwhile, the US president has delivered mixed signals about how the situation will be handled. Speaking at a news conference on Monday, Trump insisted the strait “is going to remain safe”, even though it had already been identified as a danger zone, and said the presence of the US Navy along with tanker insurance would ensure security.
The following day, he warned on his Truth Social platform that Iran would face “Military consequences” that would be “at a level never seen before” if it attempted to place mines in the Strait of Hormuz. He later added that the US military was already destroying Iranian vessels involved in laying mines.
Confusion briefly increased on Wednesday when US Energy Secretary Chris Wright posted on social media that the US Navy had escorted a tanker safely through the strait. The post was later deleted after it emerged that the claim was incorrect.
The administration has also shifted its position on releasing emergency oil reserves. After initially suggesting there was no need to tap strategic supplies, Trump said by Wednesday that the United States would coordinate with other countries to release oil in an effort to bring prices down. Officials later clarified that 172 million barrels would be released.
Economists say such steps may not significantly reduce prices but could help steady the market. “Such a move will slow rather than stop rising oil prices and offer a temporary salve to the searing burn of rising gasoline prices,” said Joe Brusuelas, chief US economist at the consultancy RSM.
The White House has also signalled that it may temporarily waive requirements under the Jones Act, which mandates that goods transported between US ports must be carried on US-flagged vessels. Press secretary Karoline Leavitt said the step could “ensure vital energy products and agricultural necessities are flowing freely to US ports.”
Appearing on television on Thursday, Wright acknowledged that the conflict had created “a significant disruption” to petrol prices in the short term. However, he stressed that the situation could bring long-term benefits if Iran no longer posed a threat to the United States and countries in the Middle East.
A day earlier, Trump had said “the straits are in great shape” and suggested oil companies should continue using the route. Yet when asked about a timeline for naval escorts to guide tankers through the Strait of Hormuz, Wright said the operation could not begin immediately.
“It’ll happen relatively soon, but it can’t happen now,” Wright told CNBC. “We’re simply not ready. All of our military assets right now are focused on destroying Iran’s offensive capabilities.”
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