The Trump administration has launched a series of measures to try to cushion the blow from the Iranian-led oil price hike, but prices remain high.
As the war drags on, it becomes clear that there is not much the United States or other governments can do to relieve high oil prices other than ending the conflict.
A military breakthrough is needed to distribute oil and lower energy prices. That means this event is very different from past market crises that President Donald Trump has weathered. The pattern of escalating political tensions followed by rapid economic relief that has lasted throughout President Trump’s second term may finally be breaking.
This is a problem that President Trump cannot solve through economic policy.
There is no compromise in economic mathematics. The International Energy Agency estimated Thursday that the war will reduce global oil supplies by about 8 million barrels a day in March. This has led to the near closure of the Strait of Hormuz, a narrow waterway bordering Iran through which as much as 20 million barrels of oil per day is transported in peacetime, and the oil industry’s attempts to circumvent the problem and increase production elsewhere.
The Trump administration and other governments are trying to bring more oil to market, the most substantial of which is releasing about 400 million barrels from strategic stockpiles. But it doesn’t happen all at once. Based on the Department of Energy’s plan, the U.S. supply will be around 1.4 million barrels per day over about four months. Overall, global emissions will likely reach 3 million barrels a day, according to estimates Goldman Sachs shared with clients.
These figures are rough estimates made quickly during the war and should be taken with a grain of salt. But the overall result is clear. Government reserves probably cannot cover even half of the daily shortfalls caused by war.
The administration has several other plans in the works. Treasury Secretary Scott Bessent said Thursday that the administration will ease some sanctions on Russian oil. The U.S. International Development Finance Corporation is working on a plan for backstop insurance for ships in the region.
Despite these measures, oil prices rose on Friday. The price of a regular gallon on Friday was $0.69 higher than a month ago, according to AAA. This is an increase of 23%. The price of a barrel of oil on the U.S. market in mid-February would have been about $63. As of noon Friday, it was $97.
The White House is well aware of the concerns of the American people. The president said ending the threat of Iran’s nuclear program would require short-term price increases.
On March 11, 2026, the Thai-flagged cargo ship Mayuri Nary was covered in black smoke in the Strait of Hormuz.
Reuters
“We expect these prices to fall significantly again” once the war is over, a White House official told CNBC on condition of anonymity to discuss the administration’s strategy.
President Trump and Secretary of Defense Pete Hegseth have predicted a short war since it began about two weeks ago, but have changed their end goals, citing the overthrow of the Iranian regime, regional trade security and the nuclear issue.
Before the war, the oil market was well supplied. “Any evidence that the bottom could continue to fall is speculative at best,” the official said.
Still, it is unusual for this president to rise to power through economic turmoil. Mr. Trump typically listens carefully to what the market is saying. The most famous episode occurred last April, when shocks over the size of his tariff program sent stock prices plummeting and nearly caused the U.S. Treasury market to collapse. The regime withdrew its most extreme plans. The market has learned the lesson contained in the derisive acronym “TACO,” which stands for “Trump Always Chickens Out.”
It was never true that Trump lost his nerve. Rather, he will take big risks for uncertain returns and change policy and rhetoric when the risks begin to materialize.
But in Iran, President Trump cannot make such a reversal because the driver of prices is not an easily changeable economic policy.
Iran is a military problem. “The only thing that prohibits passage through the straits is Iranian firing at ships,” Secretary of Defense Pete Hegseth said at a briefing Friday.
The US wants to open the Strait of Hormuz. Iran is not like that. And it’s not clear when that will change, even as the United States and Israel unleash incredible firepower on Iran, 13 days into the war.
Energy Secretary Christopher Wright told CNBC on Thursday that the U.S. Navy may be able to escort tankers through the strait, but that won’t begin until the end of this month at most. Without military aid, the captains are unlikely to budge, even if the U.S. government helps find more insurance. Still, oil transportation will probably be different than usual.
The expanding war effort has unpleasant echoes of the Iraq war. Even with tens of thousands of U.S. troops on the ground, it was not enough to end the violence, and the conflict continued for nearly nine years.
However, no one in power speaks openly about sending troops to Iran. And even if oil prices remain high, the United States and the global economy may be able to weather a war with Iran. The U.S. economic expansion that began after the coronavirus survived Russia’s invasion of Ukraine in 2022 with oil at $120 a barrel. Recently, gas prices were higher than they are now until the fall of 2023.
Meanwhile, the US military remains the strongest in the world. The Iranian government has been preparing for this moment, and so has the Pentagon. Other governments also want to open the Strait of Hormuz. Iran probably won’t be able to hold out forever.
But until Iran collapses or the US military wins, markets and the economy will remain vulnerable.
