What does Trump’s war on Iran mean for the American energy crisis?

Fuel prices rose 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 strain on power grids and prompt companies to pump more oil and gas in the United States. If the conflict continues, that will likely play a role in Donald Trump’s plans to “drill, baby, drill” — but that doesn’t necessarily protect Americans from rising energy prices.

Keep in mind that it is still too early to know what kind of war the United States may have sparked. The sudden rise in global oil prices may be short-lived. But prolonged conflict and disrupted oil and gas production in the Middle East could reshape the global flow of fossil fuels.

A longer-term military engagement has the potential to change the outlook for fossil fuel production in the United States – already the world’s largest oil and gas producer. It also risks inflaming a growing sore spot for the Trump administration: rising costs for Americans as the country’s energy demand grows.

“It’s an interesting balance, because a high oil price environment, which stimulates increased oil production, fits the ‘drill, baby, drill’ mantra, but it also reflects an environment where energy prices, especially gasoline prices, are likely to be more expensive,” says Reid Blackmore, director of research and programs at the Atlantic Council’s Global Energy Center.

“The balance between how the consequences of this war with Iran play out in U.S. energy affordability and U.S. oil and gas production is a really important area to watch especially as we (move) toward the midterm elections in November,” Blackmore says. Rising electricity costs have already occurred, especially amid the rush to build new, power-hungry data centers Become a hot topic At local races all over the United States.

Global crude oil prices rose by 8 percent to approx $84 per barrel By Tuesday, it was at its highest level Since July 2024. That raised the price of gasoline by 10 cents to an average of $3.11 per gallon in the United States. The cost of liquefied natural gas, a more important fuel source for electricity and heating, rose by 45 percent in Asia and 30 percent in Europe.

Since the outbreak of the conflict, all eyes have been on the Strait of Hormuz, which borders Iran, the United Arab Emirates and Oman, and through which a fifth of international trade passes. Global oil consumption and Liquefied natural gas trade Usually moves. The transfer process stopped this week, according to what was reported by the Iranian Revolutionary Guard Threatening to fire on ships Shipping insurance companies have changed or canceled policies. Trump administration now It says it will provide marine escort and risk insurance For ships moving through the strait.

“How much of this oil can keep flowing? That’s the question everyone is asking now,” says Mohith Velamala, an oil and chemicals specialist at BloombergNEF.

Because the United States already produces a lot of oil and gas, it is more isolated from other countries that rely more heavily on fossil fuels than Iran and its neighbors, including Qatar, where Energy infrastructure has been targeted in attacks by Iran. Higher oil prices may eventually encourage more oil and gas production in the United States. This has been a major priority for the Trump administration as part of the action plan President’s obsession with “American energy dominance“.

Despite President Trump’s efforts to boost the fossil fuel industry since his return to office, actual production projections have changed little. Before the US strikes against Iran over the weekend, BNEF expected only a 2.5% increase in US oil production between 2026 and 2030. This is due in large part to The global glut of oil led to a decline in prices. As the war in the Middle East escalates, we may begin to see this trend reverse.

However, it is still a waiting game. The current oversupply of oil has likely mitigated the impact of the conflict on markets, and price increases may be temporary if the fighting ends and the Strait of Hormuz opens to shipping again. US fossil fuel companies will want to make decisions to increase production based on long-term structural changes rather than one-time geopolitical events. As significant as this week’s events are, companies will need to make sure it’s worth the capital needed to open new wells. According to the Trump administration He does not even see the need to rely on the country’s strategic oil reserve yet.

The calculations are likely to change if the conflict lasts longer than four to five weeks, which is what Trump is doing He said it was a possibility on monday. At that point, experts say, there may be more serious talks about increasing production as the market moves toward a more supply-constrained environment. Increasing production “also gives the United States more flexibility in these types of situations where it sees a national security risk that may have additional energy security challenges,” Blackmore says. In other words, it is a measure that can protect Americans from some of the costly pain of war.

However, in a worst-case scenario, natural gas prices may continue to rise, impacting Americans’ utility bills. The United States is a The main source of liquefied natural gasTrump sought more Increase fuel exports. If the United States begins to offset the dwindling flow from Qatar — also a major exporter of liquefied natural gas — that could theoretically begin to reduce supplies available to Americans. Electricity costs could rise, which has already happened to rise Throughout the United States as well Energy demand is growing to For the first time in more than a decade.

This would certainly be possible in a “very extreme scenario” with a long-term outage in the Strait of Hormuz, which would essentially take Qatari LNG out of the market, Blackmore says. “I don’t think that seems to be on the cards at the moment.” He adds that we may not see a clearer picture of how this conflict will develop and what it means for energy until next week.

We’ve seen something similar happen After the Russian invasion of Ukraineany He grew up electricity and Gasoline prices In the United States and throughout Europe. This has been a protracted conflict that has led to new sanctions and an uptick in US LNG exports to the EU and UK – the kind of structural changes in the market not yet seen so soon after the fighting with Iran escalated.

There is also an argument that reducing reliance on fossil fuels would limit fluctuations in energy prices. “The current crisis is just another example of the instability and risks associated with dependence on fossil fuels,” Lorne Stockman, associate director of research at the environmental group Oil Change International, said in an email. “There is already an energy affordability crisis in the United States caused by rising gas prices and increased electricity demand. This can only get worse if the situation in the Gulf continues.”

If the conflict continues, it could reinforce the idea that a diversified energy mix including renewables and nuclear would enhance energy security, Blackmore says. However, Trump has worked to roll back tax breaks and federal funding for wind and solar projects as part of his focus on boosting fossil fuels. Federal subsidies for fossil fuels have reached nearly $35 billion annually, according to A a report International Oil Change magazine published last year.