White House officials are bracing for oil prices to surge past the $150-a-barrel mark as the Iran war stretches into its second month and the Strait of Hormuz remains largely closed, according to a new report.
In recent weeks, the average cost of a barrel of crude has hovered around $100, a figure that the Trump administration now sees as the new “baseline,” though a potential spike to $200 hasn’t been ruled out, a source familiar with the matter told Politico.
As a result, officials have entered “all hands on deck” mode, urgently evaluating options to tame soaring oil prices — which pushed gas above $4 a gallon this week and risks inflating costs across the broader economy.
“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,” an industry insider told the outlet.
Former Trump economic adviser Stephen Moore said things would seriously need to go wrong for crude to go past $150-a-barrel, which he described as a “nightmare scenario.”
“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,” Moore told Politico. “It’s no big shocker that the president is now really focused on getting that down as quickly as possible.”
White House spokesperson Taylor Rogers said: “The Administration continues to explore additional options it can take as needed to further mitigate any short-term supply disruptions. Thanks to President Trump, America enjoys record-high domestic oil and gas production.”
Fears of $200-a-barrel
The emergency footing at the White House comes as analysts predict the cost of oil — which held steady between $60 and $70 per barrel before the Iran war — will continue to rise.
Eurasia Group, a political risk consultancy, estimates that there is a 55 percent chance that the war will drag on through May and that oil prices could reach above $150 a barrel.
Last week, financial services firm Macquarie said oil could surpass the $200 mark should the conflict continue into June.
“There is no policy option to prevent oil prices from marching up toward $200 a barrel if the Strait of Hormuz remains closed,” Jason Bordoff, executive director of Columbia University's Center on Global Energy Policy, told Axios.
Why oil prices are rising
Conflict typically jolts oil prices by disrupting infrastructure and transport. The Iran war, launched jointly by the U.S. and Israel last month, is no exception.
After the war erupted, Iran imposed a de facto blockade on the Strait of Hormuz — a vital trade chokepoint through which 20 percent of the world’s oil flows. Traffic has since ground to a virtual standstill as tankers face the threat of drone and missile attacks and have had insurance withdrawn.
This has sparked vessel backlogs, increased shipping costs, and a dependence on dwindling stockpiles, fueling supply fears and benchmark surges.
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President Donald Trump has offered mixed signals on his plans for the all-important waterway.
On March 20, he fumed that NATO allies have refused to help secure the strait, but he later appeared unconcerned. “At a certain point it will open itself,” he said.
On Tuesday, The Wall Street Journal reported that the president would consider ending the war without reopening the Strait of Hormuz.
Pain at the pump
The heightened global oil price is hammering American consumers, starting by exacting pain at the pump.
Crude oil is the main ingredient in gasoline — accounting for roughly half the cost of a gallon of gas — so when oil prices rise, gas prices typically follows suit.
Gas prices in the U.S. have soared in recent weeks. On Wednesday, the average cost for a gallon of gas was $4.06, up from $2.98 the month before, according to AAA.
The cost of diesel, the lifeblood of the U.S. economy powering freight and manufacturing, also pushed past $5 a gallon this month, marking the highest rate since 2022. Experts have warned that the elevated price of diesel, made from crude oil, will trigger knock-on effects on groceries, shipping and construction.
Energy economist Philip Verleger told Reuters that “the costs of all products will rise.”
Since the war erupted, crude oil-derived jet fuel has also faced a shortage, driving prices up 85 percent since late February to a record $4.62 per gallon Monday. Airlines have quickly passed these costs on to passengers, with OAG flight data showing average airfares hit $465 last week — the highest price for this period since at least 2019.
“This is going to be really hard on consumers,” oil analyst Rory Johnston told Politico. “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.”
Cost hikes, which are already dire, could soon worsen as short-term buffers expire, such as strategic oil reserve releases and oil cargoes already in transit, according to Axios.
“Ships that escaped the Strait of Hormuz before [the war] began have reached port,” former Secretary of State John Kerry said last week during a conference in Texas. “They're empty now.”
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