White House senior staff and administration officials are discussing the possibility that oil prices climb to a record $150 or more per barrel as the Iran war drags into its second month, according to a person familiar with the conversations and two people close to the White House.
White House officials are looking at the economic effect of higher prices and considering ideas for bringing down those costs, including the deployment of additional emergency powers, according to two industry officials in contact with the White House, who, like others in this report, were granted anonymity to speak freely about private conversations.
President Donald Trump has also heard from Treasury officials about the near-term outlook for energy prices, which the department now sees as likely to remain above $100 per barrel for some time. According to the person familiar with internal discussions, the administration sees that number as "a baseline," and isn't ruling out the possibility of prices rising as high as $200 per barrel.
The oil price discussions are largely being run through the National Energy Dominance Council, a standard policy coordinating committee that includes the Defense, Energy, Commerce, State and Interior departments, said one of the people close to the White House, a former Trump energy adviser.
The planning does not mean the White House expects a barrel of oil to hit those record price peaks, but officials are now exploring ideas to prevent that from happening in what one industry observer close to the White House called an “all hands on deck” mode.
But it comes as the national average gas price hit $4 a gallon and as a wave of oil shortages hits Asia and makes its way toward the U.S. in the coming weeks.
Since the war started, Trump and other administration officials have repeatedly stated that the conflict would only last a few weeks and that prices would immediately drop after it ended. But that messaging has been complicated by Iran’s refusal to stop attacking oil tankers and other ships in and around the Strait of Hormuz, one of the world’s central global oil chokepoints. On Tuesday, Trump wrote on Truth Social that countries unable to buy jet fuel should “build up some delayed courage, go to the Strait, and just TAKE IT.”
“Go get your own oil!” Trump wrote.
Stephen Moore, a former Trump economic adviser, said a lot would have to go wrong for crude to reach $150 a barrel, which he called an unlikely but “nightmare scenario.”
Still, he said the administration is planning now to ensure the economy “gets out of the ditch it’s been in for the last month.” He said the president’s team is clearly aware that the economy is a serious political drag on the Republican party right now.
“All the economics team over there that I've talked to, they're all aware of the negative effects of rising oil and gas prices,” he said. “It's no big shocker that the president is now really focused on getting that down as quickly as possible.”
Still, administration officials are considering novel ideas to address the pain at the pump.
“They’re trying to come up with every conceivable idea that might alleviate energy prices, including the exercise of emergency powers and authorities and national defense reasons to address the supply chain disruption in the Strait of Hormuz,” said a second industry official familiar with internal discussions.
A White House official denied that the administration was “discussing or predicting future short-term oil prices” and that it was not weighing the possibility of $200 barrels of oil.
“The Administration continues to explore additional options it can take as needed to further mitigate any short-term supply disruptions,” White House spokesperson Taylor Rogers said. “Thanks to President Trump, America enjoys record-high domestic oil and gas production.”
The industry is not yet panicked about oil prices at $100 a barrel, but that could change if the White House tries to cap oil exports as a strategy to bring down prices, said the adviser, who has worked on energy issues with the White House.
"I think there is, finally, concern about the cost trajectory,” the former adviser said. “There is still not a clear sense of how long, after the conflict is over, it will take the system to revert to something that looks like normal."
Top brass at the Energy Department have canceled trips to instead remain in Washington as the Iran situation and energy prices fluctuate unpredictably, said a DOE official who was granted anonymity because they were not authorized to speak to reporters.
"The politicals are pretty absorbed by it all," the official said of the Iran war’s effect on energy.
Though the first month of the war has caused oil prices to skyrocket more than 40 percent in a few weeks, the real damage has yet to be felt, experts said. That’s because there was weeks’ worth of global oil and consumption already loaded on ships and headed to market when the war began. Now those ships have largely all reached their destinations.
With Iran still effectively blocking much of the traffic through the Strait of Hormuz, through which 20 percent of global oil and gas supply travels daily, there is now an “air pocket” in the system that is just starting to hit, said Rory Johnston, an oil analyst who writes the newsletter “Commodity Context.” That wave is expected to hit the U.S. in about two weeks, he said.
The U.S. will handle the coming air pocket in the oil markets better than virtually any other country because of its role as a leading producer of oil and gas, he said. But there will still be a further jump in diesel prices, jet fuel, transportation costs and more, he said.
“This is going to be really hard on consumers,” he said. “This is going to be effectively a massive tax that will sap excess disposable income. It will hit poor households in a much larger way.”
Reporters Ben Lefebvre and Zack Colman contributed to this report.
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