Donald Trump said on Sunday that oil prices would 'drop rapidly' once what he called the destruction of Iran's nuclear threat was complete, after crude rose past $100 a barrel as war in the Middle East disrupted supply routes and energy output across the Gulf. In a Truth Social post reported by Mediaite, Donald Trump described the short-term price spike as 'a very small price to pay' for safety and peace, adding, 'ONLY FOOLS WOULD THINK DIFFERENTLY!'
For context, the market shock did not come out of nowhere. The BBC reported last week that oil had already hit a two year high after Qatar's energy minister warned that Gulf oil and gas exporters could be forced to stop production within days if the conflict persisted, with Qatar itself having halted LNG production because of what it described as 'military assaults' on its facilities.
US President Donald Trump has defended the recent strikes on Iran, saying the surge in oil prices above $100 per barrel is a “small price to pay” to prevent Tehran from developing nuclear weapons.Speaking as global markets reacted to the escalating conflict, Trump acknowledged…pic.twitter.com/Vg3DTHd0yn
Trump's public line is simple: higher prices now, lower prices later. It is a neat political message, though one that asks motorists and businesses to accept a fairly brutal short-term squeeze on the promise that the turbulence will pass.
Speaking about the US response, Trump also played down talk of tapping the Strategic Petroleum Reserve. Fortune reported that, aboard Air Force One, he told reporters, 'We've got a lot of oil. Our country has a tremendous amount,' before adding, 'There's a lot of oil out there. That'll get healed very quickly.'
PAIN AT THE PUMP: President Trump says oil prices will drop rapidly when the destruction of the Iran nuclear threat is over:https://t.co/ykyqyIvtJApic.twitter.com/MPgmmlpfId
That optimism sits awkwardly beside what is happening in the region itself. CNBC reported that crude briefly blasted past $100 at the open of trading on Sunday evening as traders reacted to the widening war and the risk to shipping through the Strait of Hormuz, one of the world's most sensitive energy chokepoints.
Gas prices are on the rise amid the Iran war. For the first time in four years, oil prices have topped $100 per barrel and AAA says prices at the pump rose 48 cents over the past week.President Trump claims prices will drop quickly after the war.https://t.co/2FX0jDcmWfpic.twitter.com/UUTkiWb03m
The strain is no longer theoretical. Reuters reported that Kuwait Petroleum Corporation began cutting crude output and refining operations on Saturday as a precaution tied to the regional conflict, though it did not say how deep the reductions were. The company had been producing about 2.6 million barrels of crude a day in February, according to the same Reuters report.
Iraq's position is even more severe. Reuters said production from the country's main southern oilfields had fallen by 70% to 1.3 million barrels per day because Iraq was unable to export through the Strait of Hormuz during the Iran war. Before the conflict, those same fields had been producing around 4.3 million barrels a day.
Source: International Business Times UK
