U.S. oil posts nearly six-year high, Trump says he's not worried, but officials say the U.S. government is studying all options to suppress prices

The supply shock triggered by the escalation of Middle East conflicts has alarmed the markets. U.S. benchmark crude oil futures surged sharply this Thursday, posting the largest single-day gain in nearly six years. Facing the rapid rise in oil prices and the threat to inflation and the economy, the Trump administration is urgently evaluating all possible tools to suppress prices.

During Thursday’s midday trading session, WTI April crude futures briefly rose above $82, climbing about 10% intraday. They closed up 8.5%, the largest gain since 2020, at $81.01 per barrel. International benchmark Brent crude May contracts gained 4.93%, closing at $85.41 per barrel, with both benchmarks reaching their highest close since July 2024.

The average retail gasoline price in the U.S. jumped about 27 cents last week to $3.25 per gallon. Facing political pressure from soaring gasoline prices, President Trump stated on Thursday that he is not worried about domestic oil prices rising due to escalating Iran conflicts, saying “further actions to reduce oil prices are coming.”

In a media interview, Trump said that U.S. military action remains his top priority. When asked about rising oil prices, he said, “I’m not worried about it at all. Once the operation is over, prices will come down quickly; if they go up, so be it. But this military action is far more important than a slight increase in gasoline prices.”

Subsequently, Interior Secretary Bernhardt confirmed that the Trump administration is weighing a series of response options, stating “all options are under consideration,” including measures that could take effect immediately and more complex long-term strategies. Following this news, crude futures pared some of their gains in after-hours trading on Thursday.

Trump Administration Urgently Evaluates Price Suppression Options

According to reports, Interior Secretary Bernhardt said in an interview on Thursday that Trump convened him and other senior advisors this Tuesday to discuss a range of responses, and announced plans to provide insurance for tankers passing through the Strait of Hormuz and, if necessary, U.S. naval escort.

Currently, options under consideration by the Trump administration include: releasing strategic petroleum reserves (SPR), possibly coordinating with other countries to maximize effect; waiving fuel blending requirements; and direct involvement of the U.S. Treasury in crude oil futures trading—an unprecedented move if implemented.

Bernhardt noted that the government has not yet actually used the SPR, and details of the tanker insurance plan are still being drafted. Treasury Secretary Yellen and Energy Secretary Granholm are involved.

He said, “As a federal government, we have the opportunity to intervene and restore some normalcy. The U.S. can take on certain risks to help ensure our allies have sufficient supplies, and only we have the financial and naval capacity to do so.”

White House Press Secretary Levi said on Wednesday that there is no current timetable for when commercial shipping through the Strait of Hormuz will be restored to safety. She stated, “I don’t want to promise a specific timeline, but this is definitely something the Department of Defense and Energy are actively assessing.”

Iran Conflict Escalates, Strait of Hormuz Effectively Closed

The direct trigger for the surge in oil prices is the ongoing escalation of US-Iran conflicts. Since last Saturday’s US and Israeli military strikes on Iran, U.S. oil prices have risen nearly 21% by Thursday’s close.

According to CCTV News, late Monday night, a commander of the Iranian Islamic Revolutionary Guard Corps (IRGC) advisor announced that the Strait of Hormuz has been closed, and Iran will target all ships attempting to pass through. Later, IRGC Navy Deputy Commander Mohammad Akbari Zadeh stated that the Strait is fully under Iranian naval control, with more than a dozen oil tankers hit by gunfire.

Additionally, CCTV reported that Thursday morning, Iran’s Revolutionary Guard said that an American oil tanker in the northern Persian Gulf was hit by a missile launched by its navy.

The Royal Navy reported on Thursday that a large explosion occurred near a docked oil tanker in Iraqi waters, with a small vessel seen quickly leaving the scene. Middle Eastern Arab countries and Israel continue intercepting Iranian missiles and drones. Qatar has urged residents to stay indoors, and Kuwait has reduced processing at three refineries.

Ship tracking data shows that transit flow through the Strait of Hormuz has plummeted over 95%, with major oil and gas carriers avoiding passage. The few vessels still sailing have turned off transponders.

According to the International Energy Agency (IEA), about 15 million barrels of crude oil and 5 million barrels of refined products pass through the Strait daily in 2025. The IEA notes that the volume of oil exported via the Strait is substantial, and with limited alternative routes, any disruption would have a significant impact.

CCTV reported that Thursday morning, Amir Heidari, deputy commander of Iran’s Hatam Ansar Central Command, stated in an interview that Iran has not blocked the Strait of Hormuz.

Media reports indicate that although Iranian military officials say they do not intend to close the Strait, few shipowners are willing to transit, and some upstream oil producers have been forced to cut production.

Wall Street: Recession Risks Rise, Fed Faces Dilemma

The surge in oil prices has heightened market concerns over inflation and economic slowdown. On Thursday, the three major U.S. stock indexes all declined, failing to sustain Wednesday’s rebound. The Dow fell over 1%, leading declines, while the Russell 2000 small-cap index dropped nearly 2%. Airlines, banks, industrials, and logistics sectors led the declines, with U.S. Global Airlines ETF down about 4.5% in one day. The energy sector, driven by soaring oil prices, rose nearly 0.6%, one of the only two S&P 500 sectors to close higher that day.

Vanguard senior global economist Kevin Khang said, “From a market psychology perspective, the longer this conflict drags on, the more bleak the prospects for a sustainable resolution, and the higher the risk of a tangible economic impact.”

Yardeni Research President Ed Yardeni wrote in a client report, “So far, the only hedges against war risk are energy stocks and commodities.” He warned that a prolonged closure of the Strait of Hormuz could “increase the risk of stagflation,” and constrain the Federal Reserve’s options, because even if the economy weakens, high inflation would prevent rate cuts.

Derivatives markets have quickly adjusted their rate cut expectations. Earlier this week, traders expected the Fed to cut rates twice this year, but with oil and gasoline prices surging, that expectation has narrowed significantly. As of Thursday, the market’s probability of two rate cuts this year is less than 50%.

Research firm Ritterbusch and Associates stated in a report, “The end of the conflict remains uncertain, and further oil price increases seem likely. If the conflict continues into next week, WTI could reach $95 per barrel.”

Senior market analyst Priyanka Sachdeva of Phillip Nova said, “Even a single successful attack on an oil tanker or infrastructure, or ongoing disruptions, could send oil prices soaring again.”

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