President Donald Trump has so far avoided the most dire predictions about how gas prices would react to his war with Iran, but according to experts who spoke with Politico, the win he is currently feeling at the pump could wind up being a “temporary sugar high.”
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In the wake of the temporary ceasefire deal with Iran and the shaky reopening of the Strait of Hormuz, oil prices have fallen at a steady clip, bucking the warnings from energy experts of “$150 barrel of oil, $5 gasoline and summer recessions” as a result of the war. While Americans have certainly felt considerable pain from skyrocketing gas prices, they have nevertheless avoided the worst-case scenarios, despite the worst supply shock in recorded history.
“It’s the weirdest thing,” Rory Johnston, an oil analyst for the Commodity Context newsletter, told Politico. “I’ve never seen a market like this.”
“In addition to reduced Chinese demand, the energy futures market and the cost of actual real-world barrels of oil wildly diverged for much of the war, keeping prices at the pump lower than most thought possible,” the outlet explained. “The market continued to focus on Trump’s claims of a quick resolution to the war and his pledge to quickly drop prices while the price of crude oil in some regions spiked upward as the actual barrels available for sale became scarce.”
It added: “Trump also used Truth Social to successfully jawbone the markets, repeatedly promising victory and ceasefire, which appears to have helped calm markets and keep oil prices from rising much past $110 per barrel.”
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Some experts, however, are warning that this good fortune could end up being temporary, and could end as soon as “empty ships return through the strait to load up more crude oil, as Johnston explained.
“That means oil prices are still at risk of a quick spike,” the report continued. “The ceasefire also remains incredibly fragile. Iran attacked at least two ships in recent days and the U.S. launched counterstrikes. The latest round of tit-for-tat strikes reduced the number of ships leaving the strait from 57 on June 24 to 12 on June 28, according to Kpler.”
The report also added: “China could also ramp up oil imports, Johnston said. And the buffer of oil storage inventories in multiple countries that kept price artificially low in the last few months is virtually gone, as some facilities hit tank bottom, making the market far more vulnerable to future disruptions.”
Greg Piddy, who previously worked for the U.S. Energy Information Administration under former President George W. Bush and specializes in energy market disruptions, told the outlet that there are still many things, within Trump’s direct control, that could cause prices to spike again, noting that the situation is “still a ticking time bomb.”
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