Short of Ending Iran Conflict, Trump Has Limited Tools to Lower Oil Prices

 

Short of Ending Iran Conflict, Trump Has Limited Tools to Lower Oil Prices

 

While officials look for ways to ease oil shocks, experts say higher prices will likely persist until traffic through the Strait of Hormuz returns.

 

Brad Plumer

By Brad Plumer

Reporting from Washington

https://www.nytimes.com/2026/03/09/climate/gasoline-oil-prices-iran.html

March 9, 2026

 

As the war in Iran causes oil prices to surge and U.S. gasoline prices to rise, Trump administration officials are searching for ways to ease pain at the pump and fend off a voter backlash.

 

Yet American presidents have learned a tough lesson over and over since the 1970s. Once global oil prices start spiking, it can be difficult to shield people from the consequences. Policymakers have discussed various ideas to reduce gasoline prices at home, including tapping strategic reserves, restricting U.S. exports and suspending gasoline taxes.

 

But unless the Iran conflict ends, quick fixes will likely be hard to come by.

 

“Those of us who have been through this before know there are no easy solutions,” said Bob McNally, a former energy adviser to President George W. Bush and now president of the research firm Rapidan Energy Group. As long as the war continues to disrupt energy supplies, he said, “the president has few effective tools to quickly bring down oil prices, and that’s just a reality.”

 

Oil prices have soared during the current conflict because fighting in and around Iran has paralyzed tanker traffic through the Strait of Hormuz, a narrow waterway off Iran’s southern coast that typically accommodates roughly 20 percent of the world’s oil supply and a large proportion of its natural gas. Since oil is traded globally, that shock has quickly translated to higher U.S. gasoline, diesel and jet fuel prices.

 

 

Until that tanker traffic returns to normal — either because the war ends or because Iran can no longer threaten ships — it will be difficult to bring prices back down significantly, experts said. And the longer the conflict lasts, the greater the risks that prices could soar higher.

 

“This is the largest supply shock in the history of the market,” said Rory Johnston, the founder of Commodity Context, an oil markets analytics firm. “Until normal traffic resumes through the strait, everything else is just tweaking around the edges.”

 

International crude prices have risen by about one-third since the conflict began, and were hovering around $100 dollars per barrel for much of Monday until dropping significantly after President Trump told CBS News that the war is “very complete, pretty much.” Gasoline prices in the United States have climbed 17 percent, and now average around $3.50 per gallon, the highest level since 2024.

 

Mr. Trump has been meeting with advisers to discuss ways to lower energy costs. Possible options could include waiving federal taxes or restricting U.S. fuel exports, analysts said.

 

So far, Trump administration officials have generally downplayed the severity of the oil shocks, saying that any disruptions will be temporary and promising that the conflict in Iran would be over soon.

 

“We’re putting an end to this threat once and for all, and the result will be lower oil and gas prices for American families,” Mr. Trump said on Monday.

 

If Iran continued to disrupt oil flows in the Strait of Hormuz, Mr. Trump added, “we’re going to hit them at a level that they have not seen before. So we’re winning very decisively. We’re way ahead of schedule.”

 

Taylor Rogers, a White House spokeswoman, said in a statement, “President Trump and his entire energy team have had a strong game plan to keep the energy markets stable well before Operation Epic Fury began, and they will continue to review all credible options.”

 

One quick action the United States could take would be to release oil from the Strategic Petroleum Reserve, a stockpile of crude typically saved for emergencies. Other countries have their own strategic reserves, although on Monday the group of industrialized nations known as the G7 said they would hold off on a coordinated release for now.

 

“That’s not going to completely replace Hormuz, but it’s the single most important physical thing that Western countries can do,” said Mr. Johnston.

 

Mr. Trump had criticized the Biden administration for releasing oil from the reserve after Russia invaded Ukraine in 2022. So far, he has refrained from tapping the stockpile.

 

The U.S. reserve currently contains about 415 million barrels of oil in its underground caverns and has a maximum output of 4.4 million barrels per day. That is a fraction of the roughly 20 million barrels per day of oil and oil products that were being shipped through the Strait of Hormuz before the war.

 

Even releasing oil from the reserve might only help so much. When the Biden administration released roughly 1 million barrels per day for 180 days in 2022 after the Ukraine crisis, oil prices moderated somewhat but stayed above $100 per barrel for much of the year.

 

Other ideas to ease price shocks could be more contentious.

 

Senator Mark Kelly, Democrat of Arizona, proposed last week a temporary suspension of the federal gasoline tax, which amounts to 18.4 cents per gallon. Doing so would require an act of Congress, and would deplete federal funding for highways.

 

A more drastic possibility would be for the United States to temporarily restrict oil exports again, analysts said. In 2015, Congress lifted a longstanding ban on crude exports after America’s oil production started growing rapidly as a result of the fracking boom. The United States now exports more than 10 million barrels per day of crude oil and petroleum products.

 

In theory, forcing U.S. producers to keep more oil at home might drive domestic prices down temporarily by creating a glut of crude. Yet an export ban could also disrupt refinery operations and hurt European and Latin American countries that trade with the United States. It could also upend the economics of the U.S. oil industry.

 

“It’s a terrible tool, likely to do more harm in the long run,” Kevin Book, managing director of ClearView Energy Partners, a research firm. “But in these situations, politicians often have a hard time doing nothing and just letting the market work it out.”

 

Another thorny option would be for the United States to ease sanctions on Russia, which has millions of barrels of oil sitting in tankers that it has been unable to sell. Last week, the Treasury Department issued a temporary sanctions waiver to enable Indian refiners to buy more Russian oil.

 

Other ideas, such as relaxing environmental rules so that refineries can produce less-costly summer gasoline blends, would have a smaller effect.

 

“There’s a tried-and-true playbook that gets brought up every time prices spike,” said Jason Bordoff, the founding director of the Center on Global Energy Policy at Columbia University. “But in this case, if the Strait of Hormuz remains closed, there are very few options that can make a meaningful dent in that.”

 

Over the past week, oil and gas tanker traffic has slowed considerably through the Strait of Hormuz. Approximately 10 ships have already been attacked during the fighting, and many ship operators have stopped trying to make the transit.

 

The Trump administration last week launched a $20 billion plan to help defray insurance costs for ships passing through the strait. Experts say that is unlikely to be enough to reassure many ship operators who fear being attacked by Iranian drones. And while the administration has floated the idea of military escorts for tankers, that could take time to organize.

 

In the meantime, Saudi Arabia and the United Arab Emirates are working to send a few million barrels per day of oil south to the Red Sea through existing pipelines that had some spare capacity. But that can make up only a fraction of the output lost from the closure of the strait.

 

Oil-producing countries in the Persian Gulf may soon have to shut off their wells if they can no longer export crude. Iraq and Kuwait have already said they would cut production, and the effects could be long-lasting: Even if the strait reopens, restarting production at shut-down wells could take weeks, if not months, analysts said.

 

If the strait remains closed for months, crude oil prices could rise as high as $135 per barrel, according to Rystad Energy, a research and consulting firm.

 

One question is whether elevated global prices might spur U.S. oil producers to start drilling and producing more crude to help fill the supply gap. U.S. oil production reached record highs of around 13.6 million barrels per day last year.

 

Yet some analysts doubt the current price spike would provide enough certainty for drillers to increase production.

 

“There’s a lot of caution,” said Mr. McNally. “The problem is, we know that oil spikes caused by geopolitical emergencies can often quickly lead to recessions and prices collapsing. So the last thing anyone wants to do is order expensive rigs and by the time they get them going, prices have fallen back down again.”

 

A final thing the United States could do is to further reduce its reliance on oil consumption. The U.S. economy is already far less sensitive to swings in the price of crude than it was during the oil crises of the 1970s, in part because cars and other industries are much more fuel-efficient today.

 

Yet the Trump administration has slashed vehicle fuel-economy standards and ended federal support for electric vehicles. And even if those policies could be reimposed, they would take years to have an effect.

 

“The problem is that once immediate crisis passes, our political attention span evaporates pretty quickly,” said Mr. Bordoff. “We don’t stay the course and do things that put us in better position for the next crisis.”

 

Brad Plumer is a Times reporter who covers technology and policy efforts to address global warming.