\n<\/p>\n
A month has passed since the US and Israel\u2019s war on Iran all but closed the strait of Hormuz, through which about a fifth of the world\u2019s oil supplies typically flow. Prices have surged, amid fears of sustained disruption to global supplies.<\/p>\n
Donald Trump argues this is not his country\u2019s problem. \u201cGo get your own oil!\u201d the president urged countries, including the UK, earlier this week. The US has \u201cplenty\u201d, he added. The US is \u201ctotally independent\u201d of the Middle East, the president claimed in a prime-time address on Wednesday. \u201cWe don\u2019t need their oil.\u201d<\/p>\n
\u201cUnder my leadership, we are [the] No 1 producer of oil and gas on the planet, without even discussing the millions of barrels that we\u2019re getting from Venezuela,\u201d he said.<\/p>\n
Trump and his allies hail the US as an energy \u201csuperpower\u201d after a historic surge in domestic oil production sparked by the fracking boom. For years now, it has produced more oil than the entire country consumes.<\/p>\n
But the oil market is fundamentally international.<\/p>\n
Unlike natural gas \u2013 another crucial energy source \u2013 for which prices can vary drastically in different parts of the world, the oil market is far more interconnected.<\/p>\n
The US benchmark price for gas, known as the Henry hub, is currently less than $3 per million British thermal units (MMBtu) while the European Dutch title transfer facility (TTF) price trades above $16. A price surge in Europe doesn\u2019t necessarily cross the Atlantic.<\/p>\n
\u201cGas, unlike oil, is hard to move around,\u201d Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis. \u201cYou can\u2019t just pour gas into a drum, and then move that drum somewhere else.\u201d<\/p>\n
Significant oil price movements are rarely confined to a specific region. Brent crude, the international benchmark, has by risen by nearly half since the start of the war, to north of $100 per barrel \u2013 and climbed sharply after Trump\u2019s latest address.<\/p>\n
\u201cThink of it like a giant swimming pool,\u201d said Williams-Derry. \u201cThere are waves or ripples, but the whole swimming pool rises or falls. The fundamental level is set by the global market.\u201d<\/p>\n
\u201cUnder current policy, being a net exporter doesn\u2019t do anything to cushion the US from global price trends,\u201d he added.<\/p>\n
The US does export more oil than it imports. But it still imports millions of barrels per day, and relied on Gulf nations for almost a tenth of those imports last year. Many US refineries are geared up to process heavier crude than the lighter, sweeter stuff primarily produced domestically in the US.<\/p>\n
Graph of US monthly imports of Gulf crude oil 2000-26<\/p>\n
The energy supply disruption sparked by the war on Iran goes far beyond oil. Global fertilizer costs have risen sharply, prompting US farmers to reconsider their planned crops, as the strait of Hormuz remains paralyzed. A small but significant share of US fertilizer imports come from the Middle East.<\/p>\n
Qatar typically supplies about a third of the world\u2019s helium, which plays a key role in the manufacturing of semiconductors. But the country halted output last month \u2013 a potentially worrying move for chipmakers and the many industries that rely on them.<\/p>\n
But for now, oil remains the most visible indicator of the turmoil. Simply being a net exporter \u201cdoesn\u2019t differentially protect American households\u201d from higher prices, said Neale Mahoney, Trione director of the Stanford Institute for Economic Policy Research.<\/p>\n
\u201cBecause of the oil [price] increasing, \u200bit is going to be beneficial to certain sectors of the US economy \u2013 the energy production sectors \u2013 and certain states within the US: Texas, New Mexico, North Dakota, big energy-producing states,\u201d he added. \u201cWhile it doesn\u2019t protect the US consumer, and US consumers will be feeling the squeeze, there are winners as well as losers in the US.\u201d<\/p>\n
But the rally of big oil stocks this year will do little to cheer most drivers filling up at gas stations across the US. Average nationwide fuel prices breached $4 per gallon for the first time since 2022 earlier this week, amid widespread frustration over the increase in costs.<\/p>\n
\u201cIn the US, because we produce oil and gas, when there\u2019s a price spike, consumers are paying more, and producers are making more,\u201d said Williams-Derry. \u201c\u200bThe talk of \u2018energy independence\u2019 has to be seen as a smokescreen,\u201d he added. \u201cFor a low-income person, with a livelihood balanced on a knife-edge, they literally cannot afford higher prices at the pump.\u201d<\/p>\n
High fuel prices, many incumbent presidents and congressional candidates have learned, can scupper political campaigns. With seven months until November\u2019s midterm elections, and Republican control of Congress in the balance, voters nationwide are paying more and more to fill up their cars.<\/p>\n
Trump\u2019s professed confidence that they won\u2019t feel pain for long is perhaps best distilled into an old adage: what goes up must come down. \u201cWhen this conflict is over, the strait will open up naturally,\u201d he claimed on Wednesday, predicting that fuel prices \u201cwill rapidly come back down\u201d.<\/p>\n
Mahoney, a member of the White House national economic council during Joe Biden\u2019s administration, isn\u2019t so certain of a swift reversal. \u201cThere is the famous rockets-and-feathers phenomenon with retail gas and petrol prices, where they shoot up fast and float down like a feather,\u201d he said. \u201cEven if crude prices were to drop pretty quickly, we are likely to see elevated pump prices over the \u200bspring, and through the middle of the summer.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
A month has passed since the US and Israel\u2019s war on Iran all but closed the strait of Hormuz, through which about a fifth of the world\u2019s oil supplies typically flow. Prices have surged, amid fears of sustained disruption to global supplies. Donald Trump argues this is not his country\u2019s problem. \u201cGo get your own<\/p>\n","protected":false},"author":1,"featured_media":47874,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[187,475,84,268,19736,4772,23465,261],"class_list":{"0":"post-47873","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-crisis","9":"tag-gulf","10":"tag-iran","11":"tag-oil","12":"tag-sheltered","13":"tag-supply","14":"tag-usisrael","15":"tag-war"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/47873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47873"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/47873\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/47874"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}